Mad Money

Industrial giant nears inflection point

Boeing a battleground between fundamentals of company: Cramer

(Click for video linked to a searchable transcript of this Mad Money segment)

The price action over the next few days could be quite telling for this widely held industrial.

That is, technical analysis according to Tim Collins suggests that Boeing is near critical levels. And whether these levels hold or break could speak volumes about the stock's next big move.

Should Boeing rally, Collins suggests watching $131, a level that will likely present strong resistance. What happens at $131, should be very telling.

However, amid the broad sell off, it's key levels on the downside that are more likely to be tested.

If Boeing drops further, Collins suggests watching $122, the level to which gapped higher back in October. Collins says if Boeing closes below $122 - not if it drops below that level on an intra-day basis and bounces back - but if shares close underneath $122, then he believes the stock is looking at further downside.

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According to his analysis, would then test another floor of support, one rung lower at $111 to $113, a level created by a gap higher back in mid-September.

To make patterns all the more concerning, Collins also notes that a historical pattern that presented itself in 2011 may be repeating itself.

That is, he says the Commodity Channel Index or CCI suggests that Boeing is currently oversold.

Although an oversold reading is typically bullish, Collins notes in 2011 when the pattern also presented itself, made a second leg lower before an ultimate bounce.

If Boeing follows that same 2011 trajectory, with the same percentage decline, then the stock could fall to $112.50. That's squarely between $111 and $113 that critical level that sits one rung lower, mentioned above.

However, if you're a bull there is reason to be hopeful.

If this scenario comes to pass and Boeing declines to $112.50 it would push Boeing right down to its 50-week moving average, which has served as an excellent floor for the stock several times over the past three years.

At that level, Collins becomes a buyer.

Jim Cramer would too.

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The "Mad Money" host is a fundamental investor and he believes fundamentals behind Boeing remain very much in tact. "The fundamentals are excellent. Airlines all around the world want Boeing's new, more fuel-efficient planes," he said. ""This is one of my absolute favorite companies."

Also Cramer is a big fan of Boeing's leadership.

"Boeing has a tremendous CEO in Jim McNerney. He's one of my Bankable 21 from Get Rich Carefully, the 21 chief executives who I believe you can count on to invest with."

Therefore, "if Collins' worst predictions come true and Boeing falls to about $112, I think Boeing would be an absolute steal," Cramer said. "If you believe in Boeing, the company, like I do, then you might want to watch the price action, very carefully." Opportunity may be at hand.

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