Why The Boeing Company (BA) Could Fly Higher

Boeing Co (BA) could see gains after bouncing from its 160-day moving average

Jun 19, 2015 at 2:12 PM
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Sentiment surrounding aerospace issue Boeing Co (NYSE:BA) has been extremely bearish in the options pits lately. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 1.33 puts for every call in the last 10 sessions. The resultant put/call volume ratio ranks in the 99th percentile of its annual range, hinting at a stronger-than-usual bearish bias among speculators.

They're not the only ones blazing a skeptical path toward BA. In fact, nearly 13 million shares are sold short. At the stock's typical daily trading levels, it would take four sessions to repurchase all of these short positions.

It's somewhat surprising BA is facing such doubt. The shares have muscled more than 12% higher in 2015 to trade at $145.80, and unlike the Dow, are on pace for their fourth consecutive winning session, up 0.3% today. It's also worth noting BA recently bounced from its 160-day moving average, which has been a bullish signal, historically speaking. After the last five occurrences, the stock has rallied in the ensuing week, averaging a return of 2%.

From a contrarian perspective, this is promising. Specifically, if BA keeps flying higher, it could prompt option bears and/or short sellers to unwind, resulting in tailwinds.

On the fundamental front, it's been a busy day for Boeing Co (NYSE:BA). For starters, Polish carrier Enter Air has placed an order for four 737s, while Russian airline Aeroflot is renegotiating its order. Separately, BA has officially opened its new research center in Alabama.
 

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