Stock Of The Day: 3 Classic Lessons On The Boeing Chart

Boeing Co BA shares are flat on Friday. They are consolidating after gaining more than 50% in value since the April lows. Some analysts have attributed the recent strength to President Donald Trump's signing of deals worth over $200 billion between the U.S. and the United Arab Emirates (UAE).

The chart of Boeing illustrates the validity of three old classic Wall Street sayings. This is why we have made Boeing our Stock of the Day.

The first is “buy the breakout.”

Resistance is a price level where there is a large amount of sell interest in a market. Stocks rally if there isn't enough supply to fill all of the demand for them.

When a stock reaches resistance, its uptrend can pause or end. Sometimes, stocks reverse and trend lower after hitting resistance. This happens when nervous sellers undercut other sellers' prices so buyers will come to them.

But sometimes, the buyers overpower the sellers. The resistance breaks and the price moves higher. This can mean the sellers have left the market. Buyers will need to keep paying up to draw sellers back in. This could be the beginning of a new uptrend.

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As you can see on the chart, that has been the case with Boeing since the resistance around $191.50 broke.

“Gaps refill” is another saying.

When a stock gaps or moves rapidly through price levels or zones, it doesn't spend enough time at them for a large amount of vested interest to form. This means that if a stock eventually reverses and gets back to the same levels going in the opposite direction, it could move rapidly back through them.

Boeing gapped down from around $260 to $220 in January. It may rise rapidly back through these prices.

“Sell at former tops” is the third expression.

Some people sold Boeing around $265 in December 2023, and have regretted doing so ever since. Many decided to hold on to their losing positions, but also eventually exit them at breakeven if possible.

This means that if Boeing returns to $265, there will be remorseful buyers selling. If there is a large amount of these orders, the rally could end when it reaches this level.

These classic sayings are still valid because they refer to market principles that are the result of human nature. Many things have changed since the markets came into being, but human nature hasn't.

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