Below is an excerpt from this yesterday's episode of Schaeffer's Playbook of the Week, featuring Schaeffer's Senior Market Strategist Matthew Timpane. Below, Matthew makes a bearish case for blue-chip Boeing Co (NYSE:BA).
"With Boeing, we have a topping pattern going on, with the stock breaking below its 21-day exponential moving average. As you can see from the chart below, it has been in a tight consolidation period as it breaks below that 21-day trendline. There's also this Volume Point of Control (VPOC) gap level below that has opened up.
There's all this volume concentrated at the top, but then this volume gap that opens up. The expected move is at least down to that next gap level, residing around $189.50. BA also broke below a large 210-strike call level, and the peak call level is 220, where the equity failed near that area last week.
Data at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows BA with a 50-day call/put volume ratio of 1.87 that stands higher than 75% of annual readings.
Options are fairly cheap, with stock's Schaeffer's Volatility Index (SVI) of 32% stands in the 5th percentile of readings from the past year. What's more, BA's Schaeffer's Volatility Scorecard (SVS) tally sits at 88 out of 100, which points towards the tendency to outperform volatility expectations."
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