General Electric Company (GE) shares rose more than 6% Friday after European Union (EU) Aviation Safety Agency Executive Director Patrick Ky said that the safety upgrades The Boeing Company (BA) made to its 737 MAX could mean the airplane may return to European skies by the end of 2020.

"Our analysis is showing that this is safe, and the level of safety reached is high enough for us," Ky told Bloomberg in an interview. The troubled jet involved in two fatal accidents that killed 346 people has remained grounded since March last year. Since then, Boeing has made several software and hardware modifications to the plane's flight-control system that led to the crashes.

Key Takeaways

  • The EU's aviation safety chief says that the safety upgrades Boeing made to its 737 MAX mean the airplane could return to European skies by the end of 2020.
  • GE shares broke above a nine-month downtrend line on above-average volume Friday in a move that could drive further buying this week.
  • Boeing shares broke above a multi-month trendline in late September, flipping an area of previous resistance into support.

Hopes that the MAX could make an imminent return to the continent come as good news for the industrial conglomerate's aerospace business, which manufactures the plane's engines. The segment suffered a 44% top-line hit in the second quarter, with FactSet analysts expecting a third quarter decline of 39%. As of Oct. 19, 2020, GE stock has a market capitalization of $63.8 billion, offers a modest 0.55% dividend yield, and is trading 34% lower year to date. However, the shares have gained 3.55% over the past three months.

From a technical standpoint, GE shares broke convincingly above a nine-month downtrend line on above-average volume Friday in a move that could drive further buying this week. Those who enter at these levels should look to book profits around $10.80, where the price may encounter resistance from a crucial horizontal trendline. Protect capital with a stop-loss order placed under the Oct. 15 low at $6.61 before moving it to the breakeven point if the stock climbs above the June swing high at $8.57.

Chart depicting the share price of General Electric Company (GE)
TradingView.com

A downtrend refers to the price action of a security that moves lower in price as it fluctuates over time. While the price may move intermittently higher or lower, downtrends are characterized by lower peaks and lower troughs over time.

Below, we also take a look at Boeing's recent earnings and identify significant chart levels worth watching.

The Boeing Company (BA)

The Seattle-based airplane maker has faced significant headwinds in 2020 from both the uncertainty of when the 737 MAX will return to the skies and the global slump in air passenger demand resulting from the ongoing coronavirus pandemic. In the second quarter, the company reported a loss of $2.4 billion, or $4.20 per share, with its commercial aircraft unit recording a 65% drop in revenue from a year earlier. Looking ahead, Wall Street expects Boeing to disclose a third quarter loss of $2.23 per share when the firm releases its quarterly financial results ahead of the opening bell on Oct. 28. Trading at $167.35 with a market value of $94.5 billion, the stock has fallen 48% on the year and 6.35% over the last three months as of Oct. 19, 2020.

Boeing shares broke above a multi-month trendline in late September, flipping an area of previous resistance into support. After tracking along this indicator for the past two weeks, price edged nearly 2% higher after Ky made his bullish remarks about the MAX returning to Europe. Swing traders who anticipate further upside should consider setting a profit target near $234, where the stock finds overhead resistance from its summer high. Manage risk by positioning a stop somewhere below the blue trendline at $155.

Chart depicting the share price of The Boeing Company (BA)
TradingView.com

Upside refers to the potential increase in value, measured in monetary or percentage terms, of an investment. Analysts commonly use either technical analysis or fundamental analysis techniques to predict the future price of an investment, particularly stock prices.

Disclosure: The author held no positions in the aforementioned securities at the time of publication.