Boeing has lost support at the 50-day moving average. This is a bearish sign for the stock.
Exhibit: Boeing's Simple Moving Average (Data based on Monday, July 27, 2020)
(Source: Secure Your Financial Independence - DJIA SMA Report)
Boeing is currently trading at $169.26. There seems to be support at this level. If it loses support here, then Boeing may drop all the way to $120 for the next support level. Given the bad news at Boeing, it is entirely possible that it will touch $120 in the coming weeks or months.
Exhibit: Boeing Has Support at $169. If it loses this support, it may drop all the way to $120.
(Source: SeekingAlpha & Author Annotations)
Boeing recently announced that it will delay its 777x jet by up to an year. Even before the pandemic, Boeing was dealing with the problems with its 737 Max jets. When the pandemic hit, it grounded the entire travel industry. It now seems like it may take years before the travel industry can fully recover. It may take a couple of years after travel gets back to 2019 level that Boeing will start to get new orders for jets. There's so much excess inventory of jets across the globe that airlines may put off buying new jets for years. Combine this with the problem of airlines going bankrupt and you have lesser number of customers to chase for new jet orders. Given all these factors, it's entirely plausible that Boeing's stock could give-up much of its gain since May 2020 and retrace to $120. If it loses support at $120, it may test its lows below $100.
This crisis is a real test of leadership. Boeing is such an iconic company that it's painful to see this downfall. I am confident that in 3-5 years Boeing will be in much better shape.
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