Boeing’s meteoric run could be coming to an end, according to one technician.
The aerospace manufacturer has soared nearly 90 percent in the past year, adding more than $90 billion in market cap and contributing to more than 1,000 points on the Dow. However, Carter Worth, head of technical analysis at Cornerstone Macro, warns the Dow darling is due for a big pullback.
Last week, the industrials sector tumbled more than 5 percent after President Donald Trump announced he would impose new tariffs on foreign-made steel. This while the Dow posted its worst 4-day losing streak since November 2017.
“At some point, if selling continues, it spills over to almost all stocks,” Worth said Friday on CNBC’s “Options Action.” “We’ve seen certain tech names that are impervious come under pressure, and Boeing is no different.”
Boeing is the largest holding in the S&P Industrials Sector ETF (XLI). The XLI is up 82 percent over the last five years, outperforming the S&P 500’s 76 percent gain. Despite the strong performance Worth says a closer look at the trend line reveals a potential risk to the rally.
“The issue here and now is if you do revisit a line and start to bounce, you shouldn’t come back to it this quickly,” Worth explained. “We’re setting up something of a minor head-and-shoulders top, with a perspective break to new lows.”
Furthermore, Worth noted the industrials are beginning to look weak relative to the broader market. “[The XLI] has been going straight up for the better part of 12 to 15 months, and it has made exactly no progress relative to the S&P,” said Worth.
Worth’s analysis also warns Boeing shares have now gone longer than any point in the history without checking back to its trend line. “One of the principles of trend work is that when you’re in an uptrend you will check back to trend,” Worth explained, “I think we’re coming back to the 150-day moving average, that would imply as much as 7 to 8 percent down from here.”
Boeing is currently up 17 percent year to date, but down more than 7 percent from its February highs.
Shares were trading in the $345 range late Monday morning.