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Boeing MAX woes remain major

March 13, 2019 11:31 AM

Shares level off though MAX woes aren’t minimised

$2.7bn lighter by Tuesday’s close after a two-day 11% dive, Boeing shares have levelled off. They opened slightly higher on Wednesday. Continued U.S. safety endorsements of the 737 MAX are a partial help. As well, solid Wall Street backing opened up some bargain interest in the shares. Boeing itself continues to reiterate “full confidence” despite 737 MAX crashes five months apart.

But a perception problem remains. Boeing’s decision to hasten a software update to address an unconfirmed issue is a less than ringing endorsement. To be sure, aerodynamic systems are highly complex. The outcome of internal and external investigations could take years and won’t be clear cut. Still, the MAX represent about two-thirds of Boeing aeroplane orders and some 40% of profit. That implies a hefty 4.72 percentage points of 11.8% operating margin. As such, the shares need mass suspensions to end to climb more steeply.

Technical chart thoughts

  • If upward momentum improves, BA could erode marginal-looking c. $382 resistance (former support) from end-January
  • $371.50 has been validated numerous times as support since established as resistance a year ago
  • The stock drop has filled orphan orders amid a $364.91-$380.50 gap opened in late-January
  • But oscillators like RSI are meandering
  • Buyer support could baulk at the bottom of the latest gap ($415.50-$402.67)
  • There’s a sceptical bias after the stock’s record high on the 1st March

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