Boeing Stocks Still Working to Cope With Pandemic Turbulence

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While equity markets are trying to deal with a new set of headlines, good stocks like Boeing (NYSE:BA) is struggling to find its footing. First, considering that BA stocks never really came out of the cauldron of the pandemic. It fell off the precipice of global lockdown and is still trying to bounce back.

Boeing 737 max plane pictures

Source: Marco Menezes / Shutterstock.com

In 2020, equities collapsed, including this one, but some sectors like airlines are still suffering. Instead, the index bounced off its March 2020 lows ferociously. They got off the pre-pandemic line and took off like bats out of hell. The BA client — the airline — is still not comfortable.

I would argue that the laggards are more reasonable with their reaction in March 2020. Too many stocks are rallying too fast for their own good. This is the reason why the index is now struggling to find its footing. We took the brisk walk up and the pendulum should swing the other way now.

Fortunately for BA stocks it doesn’t have to be too far to drop before hitting a pandemic low. Therefore, part of my thesis is that a downturn is still a buying opportunity for long-term investors. In the end, it’s still a duopoly that will do well for decades. Meanwhile, there will be turbulence due to intrinsic and extrinsic factors.

Wall Street recently experienced two violent flash crashes. The first came on January 24 when the president and CEO of the Federal Reserve Bank of St. Louis James Bullard dropped his “ribbon bomb”. The second exactly a month later made the headlines of the war in Ukraine.

Last week, BA stocks broke through both levels with a bang. On Friday the stock fell 4% far more than the index. I attribute this to the increasing negative news from the conflict in Ukraine. The proof is that the airline shares like American flights (NASDAQ:AAL) fell by 7%. While the market was red, both fell disproportionately deeper.

BA Stock Recovery Slow But Sustainable

Boeing (BA) Stock Chart Shows Pandemic Support Below

Source: Charts by TradingView

Boeing’s stock fundamentals are still a bit bleak. Boeing has a special business being a duopoly, so it doesn’t have much of a sales problem. But the client is still in chaos.

Technically the chart also shows cracks from several sources. First, BA shares lost support at $200 per share. This triggers a bearish pattern that could target $160 per share. There is still time to recover from this, but it is better to do it quickly. Second, there is a gap left open from last November’s rally. The bear will try to shoot for it and will eventually act as a support.

I see no reason why Boeing should return to levels from the bottom of the pandemic, regardless of how bad things are now, they are any better off than when the earth was shut down for business. Hopefully the Russian invasion of Ukraine will stop escalating.

Therein lies another assumption that investors need to make on that front. Mine is that leaders will make peace one way or another. We are still struggling to recover from a pandemic that killed 6 million people. In addition, governments have spent trillions of dollars inflating their economies to help aid their recovery.

The bottom line at Boeing

At this stage, I trust my instincts and not the neighborhood on Wall Street. Therefore, I suggest a humble approach to investing today. Don’t allow yourself to take full advantage of anything regardless of how good it looks.

If you have long BA stocks, do not add to your position. New investors should also consider taking only part of the position. Leaving room to add more later is very important now. We have unpredictable politicians running the world everywhere, so I’m not sure if the logic will work out.

Meanwhile, if you want insurance, you can rely on market options.

As of the date of publication, Nicolas Chahine does not have (either directly or indirectly) a position in the securities mentioned in this article. Opinions expressed in this article are those of the author, subject to InvestorPlace.com Publishing Guidelines.

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