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Too Late to Join Boeing’s Bull Party

Do you remember February 13th, 2016? On that day we published an ARTICLE, called “Boeing’s Crash Is All But Surprising!”. If you have not read it, we strongly recommend you read it now, because it is the ultimate example of the Elliott Wave Principle‘s superiority over the news-following approach to the markets.

At the time of writing, Boeing’s shares were trading near $108 a share, after plunging from $150 to as low as $102. According to mainstream media, the selloff came as a result of a SEC investigation into Boeing’s accounting practices. We, on the other hand, thought it was just the third phase a natural three-wave correction. Here is how the the chart of BA stock looked like 10 months ago.
boeing 12.2.16
The Wave principle states that once a correction is over, the larger trend resumes. In this case, Boeing’s larger trend was up and since the three-wave correction from the top at $158.75 was over, we thought “Boeing is supposed to start rallying again, despite all the negative factors people blame for its crash right now.”  The Elliott Wave Principle allows  the analyst to form his own opinion, regardless of what the crowd thinks at the time. Instead of allowing other people’s negative emotions to take over, we were able to recognize an excellent buying opportunity. The chart below shows how things went.
Boeing stock reached a new all-time high of $159.92 last week. Investors, who listened to the crowd and sold their shares near $102, missed out on a 57% rally in the next 10 months. Patient Elliott Wave analysts, on the other hand, must be very pleased with the outcome.

Now, you may have noticed that the count has changed a little. That is because one of our readers pointed out that the three-wave decline between $159 and $102 should be labeled as wave (4). After a closer examination, we agreed. This means the rally from $102 is supposed to be wave (5). Its structure suggests Boeing stock might even reach the $170 mark. Unfortunately, every impulse is followed by a three-wave correction in the opposite direction. So, once wave (5) inevitably ends, a major bearish reversal could be expected.

A new all-time high could easily convince you that now is the time to buy. We do not think so. If this is the correct count, Boeing stock is in the final stages of its post-2009 uptrend. Even if the bulls manage to add another $10 a share, the bears are likely to erase all of wave (5)’s gains and take the stock back down to the support of wave (4). In other words, a decline back to $100 is likely.

The time to be greedy was in February, when others were fearful. Now, while others are greedy, you should not be.

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