Better to stick with TA

I talked bullishly lately for Boeing which has the 737 Max saga ongoing. In the most recent blog just a couple of weeks ago, I said $360 could likely be the bottom for BA. Of course, I have been proven wrong by now as BA has briefly breached the $340 handle this week when the whole market was in panic selling early this week due to the intensified trade war tantrum between the US and China. Although I could argue that it was the overall market condition that led to the weakness of BA, not by BA itself, still I’m wrong in terms of its price action. But I do want to highlight one interesting point about TA for BA, which has actually predicted this long before my recent call. If you didn’t notice, here is what I said back in March when BA was initially tanking due to the 737 Max tragedy:

I won’t be surprised to see a fast rebound towards $400 after such a swift downdraft, but I think there is a high chance of at least another leg down to test its lows and it may even go down further towards $350ish level.

In other words, my TA analysis back then has already mapped out the most likely price action for BA in the following weeks: first shooting up towards $400 and then followed by another big “crash” towards $350. Although the trade war scare has made the BA price action even worse with more decline below its $350 support, BA has largely followed the path predicted by its initial TA! Given the breach of this important support, the near term future for BA is more murky as it may struggle for a while now around $350. But my faith in BA has not changed at all! For long term investors, this recent weakness of BA should be great news as its long term prospect has not been tarnished at all. It is just a short term ripple that it will dissipate soon. BA’s fundamental remains as strong as it has been. Don’t miss the opportunity, folks!