Of the market segments that have been completely decimated by COVID-19, travel companies have been particularly hard hit as consumers and businesses have been locked up and protected. Airlines, in particular, suffered from bookings evaporating as the pandemic escalated.
But a travel-related company had already been beaten by investors well before the arrival of the corona virus. Aerospace megcap Boeing (NYSE 🙂 – whose 737 MAX jet was once the most popular passenger jet in the sky – has already been burdened by bearish investor sentiment, declining passenger confidence and a plethora of regulatory hurdles worldwide after two deadly crashes that killed 346 people. one at the end of 2018, the other at the beginning of 2019, led to the grounding of the aircraft.
Once the pandemic struck, the already battered stock lost nearly three-quarters of its value in just over a month.
However, it looks like Boeing's stock is finally ready to take off. Last month, the US Federal Aviation Administration (FAA) said the planes had been re-approved to carry passengers; other global regulators have indicated that additional approvals will be issued shortly.
To help the stocks even more, low-cost airline Ryanair (NASDAQ :), which had already placed an order for 135 planes before the MAX landed, just asked for 75 more planes, a real vote of confidence.
]
Plus, after being on Earth for 631 days, the jet has been rescheduled to carry passengers. Brazilian airline Gol Linhas Aereas Inteligentes (NYSE 🙂 said it would resume with the 737 MAX on its domestic commercial routes from December 9. Gol is Brazil's largest airline, offering more than 700 daily flights to 60 destinations before the pandemic. The company operates a full Boeing fleet and has approximately 120 MAX jets on order.
Last week, American Airlines Group (NASDAQ 🙂 hosted a PR demonstration, allowing the aircraft's maiden flight with press on board after grounding, in an effort to show passengers that the jet is now safe after a 20-month ban.
]
Boeing's technical chart suggests that the supply / demand balance is poised to take the stock to pre-COVID levels.
On Thursday, the stock posted a third rising peak since its March low, extending an upward trend, with the 50 DMA crossing the 200 DMA and triggering a Golden Cross – one of the most well-known technical indicators and perhaps one of the most optimistic.
However, that does not mean that the price is going up in a straight line. By market mechanics, a healthy rally includes corrective, take-profit declines. Yesterday's price action did indeed develop a Gravestone doji, which is a candle showing a bearish bias at the current price level.
As such, it would be safer to wait for a pullout to the bottom of the channel anyway – the USD 222 area could be a good entry, given the supposed support of the previous congestion, before taking a long position. risks.
Trading Strategies
Conservative traders would wait for the price to find support through the canal floor.
Moderate traders may be waiting for the pullout for better entry, not necessarily further evidence of support.
Aggressive traders are likely to short stocks, as the overbought RSI for this indicator is the highest since early June, when the price fell from these levels. After a pullback, they might consider joining the long position already taken by the rest of the market should the price stay on the support points. Given the higher risk (for a higher reward) at this risk level, we urge traders to be all the more rigorous with a trading plan.
Here's an example:
Trade Sample
Entry: $ 240 – on a rise
Stop-Loss: $ 244 – Tombstone doji is high
Risk: $ 4
Goal: $ 220
Reward: $ 20
Risk: Reward Ratio: 1: 5
