While Boeing Is Struggling, Look Over Here

A few interesting outcomes of Boeing’s bad week showed up in the charts.

Boeing sold off 10%, but it looks like a software problem which is a lot more fixable than a hardware component. Obviously, lawsuits and other complications will arise, but this too shall pass. Getting bearish on Boeing never seems like a bright idea as the order backlog is deep enough to plan years into the future. While the stock trades with a P/E of 21, it looks like former resistance at $360 has turned into support. I don’t see a particular reason to rush back in but trading against a tight stop at $360 looks ok.

However, a few other charts popped up this week. Airbus, the European rival to Boeing, broke out to new all-time highs. The aircraft maker is up 50% off the December lows which is similar to Boeing at the peak in early March. After such a vertical run, it would be difficult to add here. The momentum on the PPO looks very high and probably needs a rest before it can continue the flight to higher space. But finding a pullback to work into a position suggests keeping Airbus on your watch list over the next few months.

Embraer, the Brazilian jet maker, is living in the bottom right corner of the chart and is trying to bounce off the long-term uptrend on this weekly chart. The PPO momentum is trying to make a higher low and the stock closed at the top of the range for the week. You can see a similar higher low on the PPO in December 2016. Perhaps the stock can start a run here but it needs to start making higher highs and higher lows on a weekly bar. We haven’t seen that yet.

Bombardier, the Canadian small jet maker, chart did not see any movement from the changes in the industry this week. Based on the weekly chart below, making an inside week and closing in the middle of the range doesn’t look very strong.

However, one very nice daily chart is CAE systems. They make flight simulators for teaching pilots and the stock made a nice move to a new high this week. CAE is breaking above a 9-month consolidation and the momentum is just turning up which looks like a better entry than the Airbus chart. A stop at $20.50 could make this breakout a nice entry with visible support.

The overall market looks stretched to me as we go into the Fed meeting this week. While some unique opportunities like CAE look ok, I would be broadly cautious as some of the charts are taking on a defensive tone.