Boeing‘s recent run has been nothing short of amazing.
Boeing is on track for its best annual performance since 1978. The stock has soared more than 86 percent this year, adding about $77 billion in market cap and around 892 points to the Dow.
Boeing was trading at yet another all-time high on Wednesday at around $295.
But as the stock trades at record highs, one technician is warning that Boeing may have soared too far, too fast, and the meteoric run could soon come to a close.
Matt Maley of Miller Tabak says two technical indicators suggest the rally has gotten long in the tooth, with the first being the stock’s Relative Strength Index. The index essentially measures the degree to which a stock is overbought.
“If you look at its RSI chart, it’s in the high 80s,” Maley said Tuesday on CNBC’s “Trading Nation.” “It hasn’t been this high very often at all, and the last time it was this high was the very end of 2013 just before the stock rolled over and came down 15 percent.”
Maley also points out that the stock is up almost 90 percent from its 200-week moving average, a gap that hasn’t been so high in the last 20 years.
“Premiums above their 200-day moving average or 200-week moving average or anything like that are not necessarily good timing tools, but they do show the stock is getting way ahead of itself,” he said. “It makes it really tough to put new money into the stock at these levels.”
Mike Binger, a senior portfolio manager at Gradient Investments, mentioned that his firm had sold Boeing, and while it may have gotten out a bit too early, now may not be the best time to buy the stock.
Binger pointed out that while Wall Street analysts are generally bullish on the stock, “after about a 125 and 130 percent run …there’s not a lot left in this stock.”
According to FactSet, of the 28 analysts who cover Boeing the average rating is overweight with a $289.46 price target, roughly in line with where the stock is currently trading.
According to Binger, Boeing is still vulnerable to competition, and airline traffic trends that could hinder its production. This leads the portfolio manager to emphasize that while investors who hold the stock shouldn’t necessarily sell Boeing, investors looking to put new money to work should avoid the stock for the time being.
Dow stock Boeing is on track for best year in nearly 4 decades, but the charts point to trouble