Boeing Stock Lifted by China's Potential 737 MAX Approval

A short term bounce could be on the horizon

Deputy Editor
Dec 2, 2021 at 10:42 AM
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Blue-chip aerospace manufacturer Boeing Co (NYSE:BA) is up 3.4% at $194.60 this morning, after China's aviation authority gave the company's 737 MAX jet an airworthiness directive. China has not specified exactly when the ban will be lifted, but the directive instructs airline operators on specific revisions that must be made, which Boeing described as an "important milestone" for the jet's return to service. The 737 MAX has been grounded in the country for more than two and a half years. 

When we covered Boeing stock last month, the equity was getting a boost after a massive Emirates order. However, the positivity didn't last long, with BA shedding 19.3% between Nov. 15 and yesterday's close. All major trendlines are putting pressure on the equity, as Boeing stock looks to recoup some of its 15.9% year-over-year deficit.

Options traders have been more bearish than usual. This is according to BA's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 92% of readings from the past year. In other words, while calls are outnumbering puts an an overall basis, the high percentile indicates an unusually healthy appetite for puts compared to the last year.

Additionally, Boeing stock's 14-day Relative Strength Index (RSI) stands at 23, landing firmly in "oversold" territory. This suggests a short-term bounce could be on its way. 

 

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