Boeing Looks Toppy

02/09/04 08:53:19 AM

by Gary Grosschadl

Boeing (BA) has bounced a few days ahead of the airline index and now finds itself challenging a previous top.

Security: BA (NYSE)
Position: Sell

Boeing's daily chart below suggests a recent pattern of candlestick failures at recent tops. The first was a shooting star candlestick that illustrates how the bulls could not sustain the high of the day in question. The next top was hit with a bearish engulfing candlestick that also drove the stock down in the short-term. Each retracement found support at a previous congestion zone. Now another top warning is present via a doji candlestick. A doji at the top or bottom of a run often is a reliable reversal pattern, however confirmation is normally required to verify the bearish intent. A surprise move past the doji negates this.

A pitchfork or Andrews Line has been added to the chart to show support and resistance possibilities. The bullish pointing pitchfork shows a successful move to the median (center) line. It would take a super bull move to advance to the upper pitchfork. A move back down to test the lower line is another possibility. A close below this lower line could be an important test. as the previous congestion zone resides there as does the 50-day EMA. For this reason, the sell position I indicate applies only to short-term traders as another bounce between $41 - $42 is a distinct possibility.

Boeing's daily chart shows another potential short-term top.

Graphic provided by: Stockcharts.com.

Several indicators are worth mentioning. The ADX line at the top of the chart shows the bullish trend is strong, however being above the +DI line is a potential danger sign and the trend could be overheating. The CMF indicator or Chaiken money flow shows a rather bearish graph. This supply/demand type indicator has not recovered into a positive mode even though the stock has charged higher. This indicates poor conviction by the bulls and also serves as a sign of bearish divergence to price action.

In summary, if this doji candlestick confirms to the downside, a move back down to test previous support is a good possibility. A close below the lower pitchfork line could serve as a warning that the congestion zone and the 50-day EMA may not hold support, but this remains to be seen.

Gary Grosschadl

Independent Canadian equities trader and technical analyst based in Peterborough
Ontario, Canada.


Website:	www.whatsonsale.ca/financial.html
E-mail address:	gwg7@sympatico.ca

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CHART ANALYSIS

Boeing Looks Toppy

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