Boeing stock continues advance following return to 737 Max production

• Boeing stock gains more than 1% on Wednesday.
• On Tuesday, the announced return to 737 Max production pushed shares up 4.5%.
• Monday saw Boeing announce 400 layoffs in Washington State.
• For the first time since August, BA stock overtakes 100-day moving average.

 

Boeing (BA) stock made further gains on Wednesday, one day after the aerospace leader saw shares jump 4.5% as a long-running employee strike ended. BA stock had gained about 2% near lunchtime in New York but closed the day up 1.13%.

The Dow Jones Industrial Average (DJIA), which hosts Boeing as one of the 30 companies included in its price-weighted index, fell 0.22% even as the tech-heavy NASDAQ surged 1.77%. The difference in performance stems from UnitedHealth Group (UNH), the Dow’s largest holding, face-planting after the US Senate took up a bill to force health insurers to sell off their pharmacy benefit managers.

Boeing stock news

More than a month following the end of the long strike by 33,000 machinists, Boeing announced on Tuesday that it has relaunched production of its best-selling 737 Max. Shares shot up on the move, and there is reason to believe that a return to normality may push the rally to continue.

Boeing has a long road ahead of it to ramp up production to deliver 38 finished 737s per month, its goal before the strike started in September. Regulators at the US Federal Aviation Administration capped the number of 737 Max models that Boeing can produce per month back in January following the Alaska Airlines incident in which a door plug blew out of a 737 Max 9.

Boeing has 4,200 bookings for 737 Max aircraft it is yet to deliver.

The strike by the International Association of Machinists (IAM) lasted seven weeks and was the costliest US strike in a quarter century. It ended one day before President-elect Donald Trump won the presidency on November 5.

Still, Boeing said that it had delivered 13 planes to customers in November, although that figure was less than a quarter of the 56 deliveries reported for the same period a year earlier. Production of the 787 model in South Carolina continued during the strike period.

Management said now that the 737 model’s production line is up and running in Washington state, they will focus on restarting the 767, 777 and 777X production segments.

On Monday, Boeing said that it had to let go of nearly 400 employees in Washington state as part of its plan to shed 17,000 jobs and cut costs.

Boeing stock chart

Boeing stock is now above the 100-day Simple Moving Average (SMA) this week for the first time since mid-August. Even in that period it was just for two sessions before its downward trend continued.

Additionally, another good sign on the chart has made itself clear. Boeing stock used Tuesday's rally to break through the $160 to $164 region that has acted as both support and resistance all year.

The next obstacle to clear is the 200-day SMA near $171 before bulls can imagine returning to resistance in the low $190s.

 

Boeing daily stock chart