The charts on this aerospace stock show a compelling buying opportunity, says Katie Stockton
During earnings season, it is especially important to have key support and resistance levels in mind for individual stocks. These levels can be helpful in determining the risk/reward profile for a stock after earnings-driven volatility, therein allowing investors to make a well-informed decision. Boeing (BA) is an example of a stock that looks compelling from a risk/reward standpoint following a negative response to earnings. Last Thursday, the stock came into a confluence of support in the $199-$200 area, defined by the 200-day moving average (MA) and a 38.2% Fibonacci retracement level. The close proximity of support suggests downside risk is limited and can facilitate a tight stop-loss. So far, the stock has showed firmness around this level, showing a reaction to short-term oversold conditions, which increase the likelihood that support holds. BA is also oversold on an intermediate-term timeframe. The weekly stochastics have an upturn from oversold territory as a bullish catalyst, indicating the stock is likely in the process of establishing a significant low. As a gauge of upside potential (i.e., reward), we are watching the daily cloud model, near $227, as initial resistance. If this level is cleared, it would reverse the corrective phase that has had a hold since July and target long-term trading range resistance near $240. On a relative basis, BA is showing signs of downside exhaustion versus the S & P 500 Index (SPX) per the DeMARK Indicators® (denoted by the “9”) after having lagged recently, which supports a minimum four-week period of outperformance. The ratio has been making higher lows, reflecting a loss of downside momentum in recent months in a possible indication of a long-term relative turnaround for BA. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . DISCLOSURES: None. 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