The Boeing Company (BA) has ascended to the top of the Dow Industrial performance list, rocketing higher after breaking out above three-year resistance in January 2017. The stock has gained more than 50% since that time while grinding out an impressive series of all-time highs. The company’s aerospace domination has underpinned this historic advance, as well as a military landscape that should ensure lucrative Federal contracts through the next decade.
Stocks that go straight up for extended periods generate technically oversold conditions that favor deep and prolonged pullbacks, but Boeing has defied the odds so far, correcting through time rather than price since it topped out at $246.49 in late July. Relative strength indicators are now flipping back to the buy side, raising the odds that the stock will soon break out of the current trading range and head toward $300.
Boeing stock topped out at $30.94 in 1990 following a multi-year uptrend and ground sideways into a 1995 breakout that peaked at $60.50 in 1997. It tested that resistance level in September 2000 and broke out once again, but aggressive sellers then took control, triggering a failure swing that dumped the stock to an eight-year low at $24.73 in the first quarter of 2003. That marked a long-term low, ahead of strong and steady gains during the mid-decade bull market.
The shares topped out once again at $107.83 in August 2007, posting the fourth high in a rising trendline going back to 1990 before plunging with world markets during the 2008 economic collapse, losing more than 70% of its value before bottoming out just above the 2003 low. The subsequent recovery wave took more than six years to complete a round trip into the prior decade’s high, yielding a 2013 breakout that stalled just four months later in the low $140s. (For more, see: Boeing’s Stock May Have Flown Too High.)
Nearly three years of choppy range-bound action ended in a January 2017 breakout that generated a momentum-fueled uptrend into July’s all-time high near $250. It has been grinding out a symmetrical triangle pattern since that time, with committed buyers limiting sell swings to the low $230s. This pattern looks impressive, sitting at the top of a flag pole generated by a four-day 34-point vertical buying spike in reaction to strong second quarter earnings.
The stock rallied above the 2014 high in the first quarter of 2015, triggering a quick run-up to $159, followed by a decline that re-established range resistance when it failed the breakout in August. It then sold off in a final wave, undercutting range support and posting a two-year low at $102 in February 2016. The subsequent bounce stalled at $130 in April, generating a seven-month platform, followed by a November breakout that pierced the 2015 high in January 2017. (See also: Boeing Carries Dow Index to New Highs.)
Price action since the 2016 low has unfolded in an Elliott five-wave rally pattern that may have completed the third and final impulse wave in July 2017. However, this harmonic pattern can extend through additional waves when there is sufficient buying power, denying short sellers who act on premature sell signals. That could be what is unfolding right now, with the stock stuck like glue to the summer rally high despite weeks of technical headwinds.
On-balance volume (OBV) peaked with price in the first quarter of 2014 and turned lower in a persistent distribution wave that continued into the second half of 2015. It turned higher into 2016, generating greater upside than price action, which was stuck in a sideways pattern for many months. The indicator pushed above the prior high in January 2017 and has risen sharply since that time, signaling intense institutional sponsorship. (To learn more, see: Uncover Market Sentiment With On-Balance Volume.)
The Bottom Line
Boeing is holding close to the mid-summer rally high, pointing to strong resilience that could support a rally leg up to $300. An interim breakout above the August and September swing highs near $242.50 could offer early trade entry ahead of a larger-scale breakout. (For additional reading, check out: The Top 3 Boeing Shareholders.)
