We added several positions in the past few weeks hoping to catch the rotation out of the Nasdaq. Boeing stock did not take off like we hoped but we stayed on top of it. Our early entry and early profit saved BA stock from a crash landing.
Following a near-collapse during the pandemic, Boeing was cautiously optimistic after its earnings in April. Shrinking losses brought Q1 EPS up 54% to $-1.27. BA ran up in November 2022 until February 2023 when it began consolidating. It seemed poised to break out ahead of the Paris Air Show. With the Nasdaq extended 7% from the 50-day line, a position in Boeing felt like the right way to make a rotational play.
The Best Laid Plans
On June 8, we added Boeing to SwingTrader. Despite the wide action June 6, BA stock had closed in the upper half of its range and above the 50-day line. It cleared the high of June 2 and we entered the stock at 217.23 (1).
Boeing cleared the 221.33 buy point of its flat base June 12 and was IBD's Stock Of The Day. We took our first profit the following day at 222.89 with a 2.5% gain (2). This move proved prudent as turbulence set in.
Rather than taking off, Boeing stock began giving back what little gains it had. Support at the 10-day line helped to temper fears (3). However, the resistance near 224 and closing in the lower quartile was not what we wanted heading into the three-day weekend (4).
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On June 20, Boeing stock began to drop like a rock. Within the first hour of the trading day, BA stock fell nearly 2.5% from the open. Reports from the Paris Air Show were not in our favor. While both Boeing and Airbus fell short of some forecasts of 2,000 orders, the 1,100 orders and commitments unveiled fell heavily on the side of Airbus, around 830, according to Reuters.
We sold our remaining two-thirds position at 213.60 (5). With an average exit price of 216.70, we kept this trade to a fractional loss, just -0.24%. That was the benefit of our early entry coupled with early profit taking. That may not seem like much until you compare it with shares purchased at the traditional buy point (6). That entry would lack any profit cushion and trigger the 7%-8% sell rule by the close on June 22.
Boeing Stock Tailspin
Workers for Spirit AeroSystems, a key Boeing supplier, voted to strike this week. Though the strike is set to begin just after midnight Saturday, a Spirit factory in Wichita, Kan., began with the first shift Thursday.
Boeing didn't turn out to be the rotation play we hoped for but other rotations in the medical field are working as intended. Eli Lilly and McKesson joined SwingTrader June 15 and 16, respectively.
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