Boeing (NYSE:BA) has gone through a lot these last couple of months after strong economies like China and the US began grounding the use of their 737 Max Jets following the Indonesian and Ethiopian crashes in October and March respectively. Soon, aviation regulators from around the world followed this suit.
As if that weren't enough, the company said on Monday it would cut production of this aircraft by 20%. This announcement weighed hugely on its stock, which gapped down 4.44% closing at $374.52 making Boeing the second-worst performer that day on the S&P 500 behind General Electric (NYSE:GE).
Things don't look too bright either on the technical side. Here's why:
The stock made it's way into the Ichimoku Cloud in mid-March and has been trading inside of it ever since, suggesting a change in trend only if the price breaks the floor of the cloud downwards. Now, the 50MA has been a clear resistance and the stock's movement on Monday made the distance with this point even further. Plus, the price and conversion line (light blue) are both below the baseline (red) which means you have a bearish momentum.
The general rule of the Ichimoku Cloud suggests not to buy or sell if the stock is trading inside the cloud but rather wait to see which direction will it break, up or down. Since the cloud is pretty thick, it might take a while for a cloud break-through on the downside but it seems it's only a matter of days for it to happen. So, only at this point is where it is advisable to open short positions.