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Boeing’s Troubles Could Cool Bull Fever


Considering how Boeing shares got pulped on Monday, the Dow’s 100-point gain was nothing short of stunning. It was akin to a sprinter with a broken foot running the 100-meter dash in under 11 seconds.  During the bull run of the last ten years, DaBoyz all but perfected the art of rotating money from one sector to another so that there was almost never weakness across-the-board.  They appeared to preserve their stellar record on Monday, pumping up ten Dow stocks by $1 or more while Boeing shares were falling nearly 5%. Now that’s rotation! It suggests that the aircraft manufacturer’s  institutional sponsors have resigned themselves to a long slog before they can turn the stock around. They had shaken off an onslaught of horrendous headlines since May, holding the stock in a $50 range while customers decided whether to curtail orders for a 737 Max aircraft that crashed twice within a five-month period, killing 346 people. The company announced over the weekend that it plans to suspend production of the jetliner, its biggest seller. This will cut quarterly cash flow in half to around $2 billion and supposedly knock 0.3 of a percentage point from annualized U.S. GDP. This is a very big deal, and it seems almost certain to cool the bullish fever that has gripped Wall Street since early October. The yellow flag is out, and we’ll be watching the intraday charts diligently for signs of a top. Stay closely tuned to Rick’s Picks if you care. _______ UPDATE (Dec 17, 7:45 p.m.): The stock closed unchanged after being down more than $6 in the early going. This was very impressive, and it demonstrates the all but unlimited buying power that can be summoned to defend Boeing’s share price come hell or high water. It also hints at how gingerly BA’s institutional sponsors will proceed when they try to distribute as much  stock as possible in the weeks and months ahead. More immediately, look for minimum downside to 311.89 (daily, A=398.66 on  4/5/19); then, following a bounce, a relapse that breaches the watershed low at 292.47 recorded last Christmas.

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