This morning we highlighted how Boeing (BA) has become very, very oversold. Of course, BA was already facing serious problems before the coronavirus breakout took place, so it’s incredibly tough to try to pick the exact bottom for this stock. In fact, we highlighted recently that XOM had also become VERY oversold, but after a one-day bounce, the stock fell another 7%. So as the old saying goes, it’s VERY tough to “catch a falling knife!” (BTW, XOM is still very oversold…and more oversold by some readings than BA right now.)
Therefore, short-term traders are going to have a very tough time trying to “day-trade” in either one of these stocks…when they’re looking for a sharp short-term bounce. We SHOULD indeed get a “sharp short-term bounce” at some point in both of these names, but it’s incredibly difficult to figure out when that will happen.
However, for those traders who have a time horizon that is more intermediate-term based (and for long-term investors as well), picking away at these names at current levels could/should be a good idea. They should not jump-in with both feet, but if they buy some now…and hold plenty of dry powder so that they can buy more shares at several other (lower) levels…they should be able to profit handsomely when these stocks finally bounce in a significant way. In other words, the eventual bounces should be quite powerful…and should take BA and XOM well above their current levels (even if they fall further over the very short-term). Those who buy these names at various prices will have a nice (low) average cost in both of these stocks…and should be able to take advantage of an inevitable (outsized) bounce in BA & XOM.
The weekly RSI charts on both names are provided below. They show that they are both MUCH MORE oversold than they have EVER been over the past 40 years! That does not mean they’ll bounce immediately, but it should mean that the bounces should be quite powerful when they do indeed take place.
Matthew J. Maley
Chief Market Strategist
Miller Tabak + Co., LLC
Founder, The Maley Report
275 Grove St. Suite 2-400
Newton, MA 02466
Although the information contained in this report (not including disclosures contained herein) has been obtained from sources we believe to be reliable, the accuracy and completeness of such information and the opinions expressed herein cannot be guaranteed. This report is for informational purposes only and under no circumstances is it to be construed as an offer to sell, or a solicitation to buy, any security. Any recommendation contained in this report may not be appropriate for all investors. Trading options is not suitable for all investors and may involve risk of loss. Additional information is available upon request or by contacting us at Miller Tabak + Co., LLC, 200 Park Ave. Suite 1700, New York, NY 10166.