Boeing Stock Shows How Quickly Profits Get Grounded

Resistance for the stock market indexes is still in full force and bleeding over to individual equities, like Boeing stock. It’s a strong reason we are sticking with our swing trading strategy of taking profits quickly when we have them.

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Dow Flies With Boeing Stock’s Help

It’s not often the Dow Jones Industrial Average leads the market indexes in a rally. Boeing (BA) was a large part of the reason recently. When the market bottomed on Oct. 13, Boeing stock was holding above its recent lows (1).

The high-priced component of the 30-stock price-weighted index is on the heavier side of weighting. So when Boeing stock took off through the start of November (2), it brought the Dow Jones index with it.

Even its pause seemed orderly. The initial one-week pullback found support at its 10-day moving average line (3) and didn’t vary far from it. So when Boeing stock took off from a short tight area (4), we added it on SwingTrader. Our risk was low with a stop at the lows of the few days before our entry.

A Shaky Takeoff

The first few days with Boeing stock on our list were underwhelming. A 3.7% drop the day after our entry didn’t bode well as an initial impression (5). But as bad as it was, it didn’t trigger our stop.

By remaining above our stop, we were able to participate when BA stock jumped later in the week (6). Rather than being intoxicated by the strength, we took the opportunity to take our first third of the position off with a 3% gain.

The strength continued and the next day we took another third off when Boeing stock hit a 6% gain from our entry (7). It was 20 cents from the top of the day and by the close it was about 2% off its top.

The reversal didn’t trigger any major warning flags since Boeing stock still closed in the upper part of its range with a healthy gain of 1.2% for the day. It also led us to raise our stop to at least our entry point after achieving a 5% gain from our entry.

But the weakness continued in BA stock the next day (8) and it started making a larger dent in our profits leading to our exit. Later that same day we saw the stock decline to our raised stop intraday. Had we not sold that day we certainly would have been forced to sell the next, and at a lower price.

While the latest bounce (9) may prove that Boeing stock’s move wasn’t done, we still captured a 3.4% gain for the trade in a week’s time. That’s enough to consider it a success.

More details on past trades are accessible to subscribers and trialists to SwingTrader. Free trials are available. Follow Nielsen on Twitter at @IBD_JNielsen.

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