“Thoughts on Boeing? In this market, thinking puts lol”
This is the type of text message I get from my brother throughout the day.
This one was back on April 22, and I knew what he was looking at…
Boeing had earnings the upcoming Wednesday — and he loves to gamble on a possible big move.
He’s not the only one. This is where the new retail trading crowd has flocked to.
Earnings have basically become Wall Street’s slot machine. Traders place cheap bets on a big earnings move. Maybe they get the direction right and make some money.
But more times than not, they get it wrong.
That’s why my Quick Hit Profits subscribers trade earnings after the event, not before. It’s a much more consistent way to capture similar gains.
Now, this case was an exception.
Boeing dropped as much as 18% over the next week and a half after my brother’s text.
And the airplane manufacturing giant is still on people’s radar. With the stock down 65% over the last three years, at some point it has to pop…
Let’s take a look at the large-cap stock today and see where it lands on my Bank It or Tank It list…
Boeing’s Price Chart Is Sounding an Alarm
In Boeing’s first-quarter earnings, they mentioned that higher costs would hit their bottom line. Despite an 8% jump in revenues, they still came in $2 billion below analyst estimates.
They naturally blamed supply chain issues, which seem to be never-ending these days.
But the real shock in their latest report was a huge miss on earnings. Expectations were for a $0.25 per share loss. The actual results were a $2.75 per share loss.
Boeing clearly wasn’t on a path to recovery, and shares sold off on the news.
While all of that is interesting, I don’t really care.
Because Boeing isn’t even on my radar when it comes to earnings. It doesn’t qualify for my shortlist of stocks, which must have a win rate of at least 75% after my signal triggers.
What does interest me is the price action. And Boeing’s chart is practically sounding an alarm.
Every trader who wasted hours scouring the report likely missed this simple signal…
After earnings, Boeing broke below a major support level:
(Click here to view larger image.)
Shares had been trending lower in a clear price channel for over a year, with the support in green and resistance in red.
When shares fell on earnings, the move lower broke below that green support… Snapping a year-long support and signaling more weakness ahead.
Now, my brother actually ended up sitting this trade out.
He kicked himself after, of course.
But regardless of what happened with Boeing, he made the right decision.
Yes, he missed a decent return — but he also avoided a trap that consistently loses traders tons of money.
And the opportunity to profit is far from over.
Now that the post-earnings dust has settled, we can look at price to guide our next move.
This stock is clearly on a weak trend once again, and I’m expecting it to drop from here.
We’ll put Boeing on our Tank It list today — which means it’s not too late for my brother (or you) to buy puts.
The key level to keep an eye on is simply that green support. As long as prices stay below that, look for that level to act as resistance and guide the stock lower.
Chad Shoop, CMT Editor, True Options Masters
Chart of the Day:A “Meta” Cup and Handle for Gold
By Mike Merson, Managing Editor, True Options Masters
(Click here to view larger image.)
Thanks to Mark Zuckerberg, the word “meta” doesn’t quite conjure the same ideas it used to.
But I’ll ask you to think back to what the word meta meant pre-Facebook rebrand: A layer deeper, sometimes even removed, from the previous thing. Self-referential.
I bring this up because I think I’ve found a “meta” cup and handle pattern occurring in gold prices.
I’ve been wrong about gold recently. I thought after the most recent break up toward $2,000, we’d see the momentum continue and gold make new highs. That didn’t happen. Gold has lost 5% instead.
But looking back, the last couple years in gold could just be the handle to an epic, near-decade-long cup.
Cup and handle patterns are bullish continuation patterns. They form when prices form a long, broad U-shape, and trade in a downtrending channel before breaking higher.
The blue cup with handle is obvious. Gold has been in a downtrending channel (the handle) for 2 years after breaking higher in early 2020, after 8 years of grinding slowly lower, and then higher (the cup).
But, seen another way, that downtrending channel does look a bit like a smaller cup, with the second handle getting ready to form.
I am likely in the minority on this, but I still think gold prices have a shot at new highs this year. And a decade from now, gold prices under $2k will probably look like a steep bargain.
Mike Merson Managing Editor, True Options Masters