The Durable Goods Orders in the US plunged by 14.4%, and a significant factor in this has been the disastrous performance of Boeing stocks in the last 18 months. Ever since the crash of the Boeing 737 MAX belonging to Ethiopian Airlines that forced the grounding of that fleet, it has been on trouble after another. The coronavirus pandemic and the impact it has had on aviation has caused airlines to either cancel orders or put outstanding ones on hold.
An industry trade group has predicted a slump in the global airline business by as much as $314 billion in 2020. The 2nd steepest drop in this piece of data in history shows the extent of the problem. Jobs are fast disappearing in the airline industry, and several airlines have placed workers on unpaid leave.
Word on Bloomberg News today is that Boeing will cut the production of the 787 Dreamliner by nearly 50%. Analysts are also predicting that workforce reductions are on the way and could be announced as early as next week during the company’s Q1 2020 earnings call.
Boeing is undoubtedly at a crossroads and the earnings report of next week may provide more forward guidance on the company’s finances and also some direction on Boeing share price.
The daily chart for Boeing share price shows that a symmetrical triangle has formed at the end of a steep decline from March 2020. Will this triangle signal more Boeing share price declines, or would it act as a bottom and enable the stock to recover?
One outlook suggests that fortunes could dip further, especially if the earnings report of next week does not please investors. A worsening sentiment on Boeing could open the triangle up to a breakdown, which will precipitate a decline to the most recent lows seen last week at 119.18, with a possibility of further downside extension to the lows of March 18 and 19 at 90.40.
On the flip side, if investors are encouraged by the forward guidance, or they feel that things cannot get much worse than they already have for the stock, then buyers may step in to drive Boeing share price above the triangle and towards the 161.87 resistance. Further advance towards the highs of March 12/26 at 186.40 could follow an additional push in Boeing share price. This price is also near the 38.2% Fibonacci retracement from the swing high of February 11 to the swing low of March 18.
Sellers may also be waiting for a pullback before selling on rallies, in which case further Fibonacci retracement levels to the upside may become relevant to such trade ideas.