The company knew that it inadvertently made an alarm alerting pilots to a mismatch of flight data optional on the 737 MAX, instead of standard as on earlier 737s, but it failed to disclose that fact to regulators for more than a year. While Boeing insisted that the omission is not a safety risk, the alarm is suspected to have played a role in the two recent crashes that grounded the planes worldwide.
Barclays analyst David Strauss downgraded the stock to Equal Weight and lowered his price target to $367.00 from $417.00, saying that the recovery of 737 MAX production could take longer than expected. In a survey of 1,756 fliers in North America and Europe, the analyst and his team found that 52% would choose another aircraft type if given a choice and that only 39% would fly on the MAX within a few months.
From a technical standpoint, the stock broke down from a descending triangle chart pattern to its 200-day moving average at $361.63. The relative strength index (RSI) fell near oversold levels with a reading of 34.76, but the moving average convergence divergence (MACD) experienced a bearish crossover. These indicators suggest that the stock could see more downside ahead after a period of consolidation.
Traders should watch for some consolidation below trendline support and near the 200-day moving average. A breakdown from these levels could lead to a move to S2 support at $344.02. A breakout back above trendline resistance could lead to a move toward the 50-day moving average at $386.82 or R1 resistance at $396.59, although that scenario appears less likely to occur given the bearish sentiment surrounding the stock.
The author holds no position in the stock(s) mentioned except through passively managed index funds.