Stock About To Fall Out Of A Key Technical Pattern

B/E Aerospace, Inc (BEAV),  manufacturer of interior products for airplanes has seen a sharp rally off its August 2012 lows.  Given the company’s close association and exposure to the commercial aviation business, it’s no surprise that the stock’s now 10 month old rally came much in correlation with a rally in the airline stocks.

To be exact,  B/E Aerospace, Inc (BEAV) rallied to the tune of 80% from early August 2012 up to its recent highs last week on June 7th.  To be fair, the rally has been orderly, with a series of consolidation and rally phases, which at the margin speaks for potential further upside in the stock over the medium term.  If we look a little closer however, note that the stock took an already nicely up-sloping chart and flipped it into a steep ascent in March of this year.  This acceleration of the upward trend also caused the stock to break above its longer-standing up-trending channel (red parallel lines) in March, and over time formed an ascending triangle (blue dotted lines).  The ascending triangle, if broken to the downside has bearish repercussions for the stock, and at the moment the chances for such a break are increasing by the day.

beav 12 month chart

On the closer-up daily chart looking back to March we see that the stock hasn’t done much over the past month and a half, but did continually find support on a daily closing basis at a line around the $62 mark.  Yesterday, June 12th the stock once again showed weakness which may soon give the stock enough downside momentum to press through $62 to the downside.  Should the stock be able to break below $62 on a daily closing basis it would be able to target the $59 area fairly quickly, which also coincides with the longer-standing uptrend line from August 2012.

beav daily chart












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