It’s probably time to buy The Boeing Co. (NYSE:BA).
Not that the company won’t still face lawsuits and regulatory smackdowns, but what happened at a House of Representatives hearing on Wednesday now looks like a buy signal.
Here’s What I’m Doing
The takeaway from the hearing, where lawmakers questioned acting FAA Administrator Daniel K. Elwell is that pilot error is now the superficial storyline.
Elwell testified that in the October Lion Air crash, the automated anti-stall feature on the 737 MAX activated when it shouldn’t have. He testified that the pilots should have responded by turning off the motors to the part of the airplane that was forcing its nose downward, “but they didn’t,” Elwell said.
The outgoing FAA Administrator also said that when the same automated feature, the Maneuvering Characteristics Augmentation System (MCAS) mistakenly kicked in in the Ethiopian Air crash five months later, the pilots “didn’t adhere to the emergency” directive issued by the FAA in November.
Representative Sam Graves (R-Mo.), the ranking Republican on the full transportation committee, said information from preliminary investigative reports shows there were pilot-related issues with the Indonesian and Ethiopian crashes.
Of course, there are going to be more hearings and more reports and further investigations. And Boeing could get slammed. But, if pilot error, above everything else that was wrong with what Boeing did or didn’t do is at the bottom-line here, then Boeing’s going to recover and possibly quickly.
I want to own Boeing. Here’s how I’m going to play it now.
The $360 price level was important to me. That’s where I expected Boeing’s stock to find support as it fell from all-time highs of $446.
It broke through that $360 support and fell to its next important support level at $340.
That’s where I should have bought it.
While I was expecting the stock to break $360, I got nervous when it dropped to $340, thinking it could break that support and head down to $320, then maybe super support at $300.
Frankly, I was hoping it would tumble down to $300, because I like to buy great stocks at cheap prices.
But, it didn’t. The stock bounced off $340. Wednesday’s hearing was a big deal for the stock.
Yesterday Boeing closed up $8.17 or 2.36% settling the day at $353.81.
It’s a buy here, that is if you want to own this great company. The reason it’s a buy here is, it could quickly get back above $360, the support it previously broke, which is now “resistance” for the stock.
When a stock gets above a new resistance level, the one that was support that it just broke, that level could quickly become support again and end up being a launching pad for the stock to go higher.
Of course, we’re not there yet. And Boeing could get there and then break down again.
But, because I want to own Boeing and don’t want to watch it head back higher without owning some, I’m going in now.
And because I want to own Boeing and I didn’t get to buy it on the cheap down at $300, I’ll buy more stock if it falls from where I get in today.
I’ll buy more stock at $340, because that’s still support. And that support just held up the stock.
And I’d buy more at $320, because if I’m already committed and the stock drops, I’ll suck it up and add to my position.
If Boeing gets down to $300, where it still could get to, I’d buy a lot more there. A lot more.
That’s how I’m playing Boeing today.
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