The Boeing stock price has plunged in the past few weeks, moving into a correction after falling by 11% from the year-to-date high of $242 to the current $215. It has formed the risky double-top pattern, pointing to more downside, despite major catalysts ahead.
Boeing stock has key catalysts ahead
Boeing, the giant American manufacturer, has had some notable catalysts in the past few months. The main catalyst is the fact that its planes have not had a major issue in almost two years now.
The safety of its planes means that the management has continued to focus on its turnaround measures. In the past, key accidents like Ethiopian and Alaska have led to the grounding of its planes in the US and other countries.
Boeing issues have enabled Airbus to pass in terms of backlog. It now has a backlog of about 6,539 compared to Airbus’s 7,156. Airbus has delivered 434 planes this year, while Boeing has delivered 385 planes.
Still, Boeing is having some major catalysts that may push its stock higher in the coming months. First, the company is receiving more orders than Airbus this year. It had 1,015 orders this year so far, higher than Airbus 865.
Read more: The Boeing crisis: will the company make it out alive?
Most of the orders have come from mega deals such as Qatar Airways’ order of 150 wide bodies and a 32-order from British Airways.
There are two potential large orders coming up. According to Bloomberg, Turkish Airlines will place a 250 order this week when Recep Erdogan meets with Donald Trump in the White House.
Analysts also expect a major order from Chinese companies when Trump meets with Xi Jinping. While the US is in a trade conflict, Chinese companies may want to diversify their plane supplies.
The other major catalyst is that the company is making progress towards boosting its monthly production. It hopes to go back to normal output in the next few months.
Meanwhile, Boeing published strong financial results recently. Its revenue rose to $22.7 billion as it sold about 150 commercial planes. The net loss of about $612 million was much better than the previous $1.43 billion. It also improved its free cash flow, with outflow moving to $200 million.
Why BA stock has plunged
Still, the company has more challenges, which explains why the stock has plunged recently. The main issue has been the problems with its 777-9 plane that has been delayed for year.
In a recent statement, the company’s CEO noted that it was much behind the FAA certification and that it had a mountain of work ahead.
The FAA certification has taken longer because of the past issues with the Boeing 737 MAX planes. Therefore, there is a risk that some airlines will cancel the orders if the delay continues.
Boeing stock price analysis
The daily timeframe chart shows that the BA stock price has formed a double-top pattern at $238. It has then moved below the neckline at $215, its lowest level in August this year.
The stock has formed a bearish flag pattern, which is made up of a vertical line and a consolidation. It also dropped below the 50-day Exponential Moving Average (EMA).
Therefore, the stock will likely drop to the 38.2% Fibonacci Retracement level at $200, which is about 7.8% below the current level. It will then bounce back later this year.
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