High-flyer Boeing (NYSE: BA) closed out last week with its worst weekly losses since March, on worries over an escalating trade war with China.
Newton Advisors technical analyst Mark Newton is urging caution on the Dow Jones leader.
"Boeing is unattractive in the short run," Newton said the media Friday
"It looks like further weakness is going to happen not only for Boeing but a lot of the stocks in the aerospace and defense sector in the short run."
Boeing's losses over the last week could mark the beginning of a short-term correction for the stock, says Newton. He anticipates further downside over the next four to six weeks with a technical pullback to $336 possible.
A decline to that level would represent a 10% drop from its 52-week high set on June 7, putting the stock in correction territory.
The shares lost another 0.6% on Monday as trading began for this week. Boeing began Tuesday down $9.90, or 2.8%, to $344.84. Boeing is up 21% for the year, putting it neck-and-neck with Nike (NYSE: NKE) as the best performer on the Dow.
Boeing's RSI, a measure of overbought conditions, spiked as high as 91 in January and 75 in February. After last week's selloff, it has an RSI of around 50.
Investor optimism over Boeing earnings has created difficult bars for it to clear in coming quarterly reports, according to one senior portfolio manager at Gradient Investments.
He adds high expectations and a massive year-to-date rally have made for expensive valuations, says Binger. The stock trades at nearly 23 times forward earnings, compared with the S&P 500's 16.6 multiple.
