Scrolling through my scans last night, one stock out of more than 100 names on the bullish list jumped out at me: Boeing (NYSE: BA).
It wasn’t so much seeing Boeing on the bullish list that got my attention, it’s just that I have used the stock as an example of a company that should be keeping an eye on the Federal Reserve’s interest rate decision and the impact that will have on the exchange rate.
Boeing relies heavily on international orders. If the value of the U.S. dollar increases significantly, it could hurt the company’s sales numbers. Fortunately for Boeing, its orders tend to be placed years in advance and thus the impact won’t be an immediate one.
At any rate, when I started looking closer at the charts, I liked what I saw in Boeing stock. The daily chart shows that the stock is oversold, but it’s finding support in the $140 area. The pattern in the slow stochastic readings looks similar to the one we saw last fall. At that time, the stock was trading down below the $120 level and then rallied up to $134 by the end of November.
The weekly chart was also encouraging for the stock. We see that the weekly slow stochastic readings are oversold for the first time since last summer, when the stock was trading in the $115-$120 range and eventually rallied up over $157 in February. We also see how the $140 support level is important, as it was a peak back in early 2014.
One of the things that helped turn Boeing stock around last summer was the company’s second-quarter earnings report. Last July, analysts were expecting Boeing to earn $2.01 per share, but the company delivered EPS of $2.42.
The next Boeing earnings report is coming up on July 21. Analysts are forecasting earnings of $2.06 per share for the quarter, which has been tweaked downward from $2.09 over the last few months. If the company can deliver another surprise to the upside, the stock could break to a new high.
While the interest rate and exchange rate situations are a concern for Boeing, I don’t think they hold the stock back over the next six to nine months. With China, Japan and the eurozone all in the middle of quantitative easing programs from their central banks, the demand for Boeing’s products could benefit as the economies of these countries and region improve.
I would look to buy Boeing in the $140 to $145 range with a target gain of at least 20% over the next six to nine months. I would set a stop-loss in the $132 area, as there is secondary support around the $135 range. I like to set my stops far enough below the support levels that I don’t get stopped out on a false breakdown.
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