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“All truths are easy to understand once they are discovered; the point is to discover them.” – Galileo
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
We may be eight days into the year already, but from a market perspective, today seems like the first day back. While there isn’t any economic news on the calendar, there’s been a ton of announcements from individual companies concerning guidance and Q4 performance. This week also marks the unofficial start of Q4 earnings season, and we’ll have the JP Morgan Healthcare Conference and the 2024 Consumer Electronics Show. It’s also a full trading week!
The biggest individual stock story of the morning is Boeing (BA) which is trading down around 7.5% after a door panel on an Alaskan Air (ALK) flight blew off mid-flight. In response to the event, the FAA has ordered the grounding of all 737 MAX 9 jets in the US.
Boeing can’t seem to catch a break this decade, but towards the end of last year, the 40%+ rally in the stock suggested that maybe the worst of the company’s problems were behind it. This morning, though, the stock is poised to gap down to just above its 50-day moving average (DMA) in what would be the worst downside gap for the stock since 6/11/2020.
As painful as the decline is for BA shareholders this morning, historically the stock has tended to bounce back following downside gaps of at least 5%. The chart below compares the stock’s median performance following 5%+ downside gaps in the stock to its average performance for all periods since 1980. Outside of the one month, the stock’s median performance and frequency of positive returns were better than the average for all periods and in many cases, significantly so. That obviously doesn’t guarantee anything going forward, but even in the post-COVID period, the stock’s performance, especially over the following three, six, and twelve months, has tended to be positive.
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