US indices pull back before the open; Boeing -4%

Summary:

  • US indices trading a little lower before the opening bell

  • US30 forming possible topping pattern

  • Boeing called to open lower after broker downgrades


There’s been a bit of a pullback for the US markets ahead of their cash session with all the indices trading in the red at the time of writing. The size of the declines are pretty small with losses ranging from 0.1% for the US500 to 0.45% for the US30. The final session of last week saw the US30 surge higher to trade at its 2019 peak after the strong NFP report, but there was a lack of follow through and price ended the day back near where it was ahead of the jobs report.

A potential evening star could be forming in the US30 with today’s close key. Looking back at previous examples it appears that the formation sends a stronger signal if the price ends the day on its lows (1) rather than if there is a sizable wick below (2 and 3). Source: xStation

 

In giving back more than half the gains on the close the D1 candle has a sizable upper wick and with the weakness seen so far today a potential evening star reversal could be forming. This would require a daily close below the 26300 to complete the 3-candle setup while highs of 26510 could be a level to watch above. The gap higher seen at the start of last week from 25953 remains unfilled.

 

One of the chief reasons for the underperformance in the US30 compared to the other large cap benchmarks in the past month or so is due to Boeing. With the airline manufacturer seeing its stock price fall after the Ethiopian Airlines crash and with this accounting for a greater than 10% weight of the index, it is clearly having an adverse impact. Boeing is called to open more than 4% lower this afternoon after Bank of America Merrill Lynch has cut its outlook saying the recent troubles are worse than expected. BofA now estimates delays with the 737 to last six to nine month, longer than the three months originally forecast. BofA cut its rating to neutral from buy and lowered its price objective to $420 from $480.

Boeing shares are called to open lower by more than 4% this afternoon with the stock dropping after BofA cut its outlook. Source: xStation

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