Dow component The Boeing Company (BA) now insists that the troubled 737 Max airliner will return to service by the end of 2019, in a departure from its initial reaction, which was to blame pilot error for two fatal crashes and plead fruitlessly with President Trump not to ground the aircraft. The heartless response eroded confidence in the aerospace giant, leaving shareholders to wonder if the scandal would bring its returns to a crashing halt.

A March bounce in Boeing shares stalled below $400 in April, trapping dip buyers who thought the bad news coverage was overblown. But as it turns, out, the Max has problems that Boeing should have admitted in a more timely manner, rather than trying to shut down opposition and calling in favors from the nation's highest political office. It has cost the company a bundle in profits and lost trust between then and now, with the stock slumping nearly 25% below March's all-time high.

BA Long-Term Chart (1995 – 2019)

Long-term chart showing the share price performance of The Boeing Company (BA)
TradingView.com

A steady uptick completed a round trip into the 1990 high in 1995 and broke out, entering a trend advance that stalled above $50 in 1997. A 2000 breakout made modest progress, reversing in the low $70s at year end, ahead of a steep decline that found support in the upper $20s in the first quarter of 2003. It took another two years for the stock to complete a bounce into the 2000 high and break out, posting impressive gains through the balance of the mid-decade bull market.

Boeing stock turned sharply lower with the rest of the market universe in 2008, descending in a straight line that ended within one point of the 2003 low in March 2009. The subsequent recovery wave stalled in the $70s in 2010, yielding more than three years of sub-par performance before clearing resistance and heading into a series of new highs that peaked in the upper $150s in the first half of 2015.

A sell-off to $100 in 2016 marked a historic buying opportunity, ahead of a spectacular uptrend that gained more than 400% into March 2019's all-time high near $450. Technically speaking, the sell-off since that time marks the first major pullback since the start of that rally wave, with the expectation that "buying the dip" will offer healthy profits. Unfortunately for bulls, long-term cycles predict that the decline still hasn't reached the final downside target.

The monthly stochastic oscillator crossed into a long-term sell cycle in March 2009, predicting at least six to nine months of relative weakness, after hitting the most extreme overbought reading since 2005. The signal has now entered its third month and is fully intact because the indicator still hasn't reached the oversold level. Even so, the decline has been orderly and shown no signs of panic, reflecting heavy institutional ownership that is trying to survive the bad headlines.

BA Short-Term Chart (2017 – 2019)

Short-term chart showing the share price performance of The Boeing Company (BA)
TradingView.com 

A Fibonacci grid stretched across the 2016 into 2019 uptrend indicates that the stock broke harmonic support at the .618 retracement level in mid-May and failed a resistance test a few weeks later. It hit a five-month low on Monday and is now getting closer to major support at the .786 retracement level near $325. However, it's hard to recommend buying the stock until it reaches that level and builds a sustainable reversal pattern.

In addition, price action off the rally high has unfolded through a classic Elliott five-wave pattern, with the late May downturn signaling the potential start of a fifth wave climax. These selling impulses are notoriously difficult to predict because they can end quickly or build multiple smaller selling waves at lower levels. But for now, many Elliott technicians will be watching for the Elliott wave theory pattern to complete at or near the .786 retracement level.

The Bottom Line

Boeing stock continues to trade lower despite repeated attempts by CEO Dennis Muilenburg to defuse the crisis. As a result, it's still too early to buy the aerospace giant.

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