The stock fell Wednesday after the Federal Aviation Administration declared Boeing’s 737 Max planes once again safe to fly, a key development in a two-year saga that stemmed from two deadly crashes in 2018 and 2019.
Shares of the Dow component initially rose 5% on Wednesday but reversed course to close more than 3% lower as a broader market sell-off dragged on the major averages.
Matt Maley, chief market strategist at Miller Tabak, said this likely wasn’t a “sell the news” phenomenon.
“It’s just a normal and healthy reaction after a huge rally,” he told CNBC’s “Trading Nation” on Wednesday.
Up almost 41% just this month and 114% from the March bottom, Boeing’s stock simply “needs to work off that overbought condition,” Maley said, citing a chart.
He expected the stock to pare its gains for a week or so and make a higher low as it digests the positive news. Boeing closed at $203.30 a share on Wednesday.
“Then if it can break out and break above its June highs, which is right in the 230 to 230.50 level, … in any kind of meaningful way, it’s going to be really bullish for the stock,” Maley said. “Short term, it needs a little bit of a breather. That’s OK â again, normal and healthy. Long term, the stock looks great.”
Industrials as a whole are likely breathing a sigh of relief over the Boeing clearance, said John Petrides, a portfolio manager in the wealth division of Tocqueville Asset Management.
“Boeing went, in the past 24 months, from a cash-flow darling to a Covid disaster where they almost had to get bailed out by the government,” Petrides said in the same “Trading Nation” interview.
“Clearly, this is all positive headline news, but I think there’s broader implications for the entire industrial sector,” including the companies along Boeing’s massive supply chain, he said.
“We know there’s been a sector rotation out of growth and into value. Cyclicals have benefited and industrials in particular,” he said. “If we get a Biden infrastructure package plus some Covid relief and an economic recovery and this help from Boeing now that the 737 is back in play, then I think there’s a broader picture here that the industrial sector in general looks very attractive.”
The Industrial Select Sector SPDR Fund (XLI) closed less than half of 1% lower on Wednesday after hitting a new all-time high.
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News – Boeing 737 Max can fly again: The key level to watch in the stock, according to one trader