As Boeing shares plummet, a rare chart pattern points to more pain

Boeing shares are in a tailspin.

The aerospace giant has plummeted 8 percent in the past two trading days, pushing the stock into a correction. It is now down more than 10 percent from its 52-week highs.

"I've become more concerned about the stock recently," Matt Maley, equity strategist at Miller Tabak, said on CNBC's "Trading Nation" on Thursday. "The vast majority of its gains came in the first two weeks of the year. Then it's become stuck in a range lately so it's been kind of dead money for almost 11 months now."

Boeing's shares are still up more than 12 percent year to date. Yet over the past six months, whipsaw trading has caused the stock to shed around 11 percent.

"That range has been a wide one and it's actually formed what's called a broadening top," said Maley. "They're very rare and they usually signal a top for the stock so if we break down below the lower end of that pattern, it's going to be a big concern for the stock."

The bottom end of that chart is at around $300, a 10 percent drop from current levels.

"We can't get too concerned about the stock quite yet, but again unless we get something better coming on this trade front, this is something that is becoming more an issue on a technical basis," said Maley.

Stacey Gilbert, market strategist at Susquehanna, says options traders expect more wild swings for Boeing.

"In terms of volatility, that's what's changed most aggressively in this stock," Gilbert said on "Trading Nation" on Thursday. "Over the last two years, the likelihood that Boeing was going to be up or down 40 percent over a one-year period was implied in the market at roughly 5 percent. It's now almost seven times as likely."

The likelihood of a 40 percent move up or down over a one-year period for Boeing is now a one standard deviation, or roughly 33 percent, says Gilbert.

"The overall shift in a risk-off in the marketplace has dramatically changed the risk profile to what Boeing shares can move, and I think that's what investors should be aware of," added Gilbert.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more