Over 40 years’ heritage
185,800 clients worldwide
Over 15,000 markets

Aerospace sector targets 4600 level

After a steady run higher in 2012 and 2013, the daily graph for the aerospace sector looks grimmer.

A sharp gap lower in mid-February for this sector, consisting of firms such as BAE and Rolls-Royce, took it through the 200-day moving average.

Both BAE and Rolls Royce had to announce difficult results during February, negatively affecting investor sentiment. The former experienced a £700 million drop in revenue, prompting a 10% fall in its share price. The latter expects no revenue growth, a stark change from the forecast 5%, as defence cuts take effect.

We’ve seen the sector drop back this morning too, and with the 200-DMA broken, and beginning to point lower, the outlook seems to point towards further losses.

We can see the 4600 level provided significant support in April of last year, and also in the middle of this month. As a result, I would look to initiate short positions with a target around 4600, some 250 points below the current level, with a stop loss in the region of 5000, where the 50-DMA currently resides.

Aerospace and Defence chart

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.