Stock Of The Day: Turbulence Ahead For Boeing?

Boeing Co BA shares are little changed Friday. This comes a day after a federal judge in Texas rejected the company's plea deal in a case related to two deadly 737 MAX crashes.

Our team of expert technical analysts has made it our Stock of the Day.

There is a good chance the recent uptrend may end soon and the stock heads lower. As you can see on the chart, the $163.50 level has been important for Boeing since the end of April. It was support then.

In September and October, it was a resistance level. Both times it reached this resistance, the stock rolled over and headed lower. There is a good chance it will happen again.

Read Also: ‘Problem Is Much Larger:’ After Boeing’s Plea Deal Is Rejected By Federal Court Over Monitor Provision, Experts Blame ‘Fundamentally Broken’ System ‘In Dire Need Of Reform’

Resistance is a large concentration of investors and traders who are looking to sell at, or close to, the same price.

Stocks tend to sell off of resistance when some of these sellers become nervous and impatient. They are concerned other sellers will undercut them. They know buyers will go to whoever is willing to sell at the lowest price and they don't want to miss out.

As a result, they lower the prices they are willing to sell. Other nervous sellers see this and do the same thing. It could result in a snowball effect that pushes the price lower.

The reason why there has been resistance around $163.50 is because of buyer's remorse.

Some who purchased shares around this level when it was support came to think they made a mistake when the price went lower. Many decide to get out at breakeven if possible.

So, when the shares rallied back up to their buy price, they placed sell orders. And there are so many of these sell orders that it caused resistance to form at the same price that had previously been support.

In the long run, it isn't clear how the court's rejection of the plea deal will affect Boeing. But in the short run, there is a good chance the stock soon reverses and trends lower.

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