Major Earnings Week for Aerospace & Defense Sector with GE, RTX, NOC, BA & LMT

Earnings season rolls on this week, with aerospace and defense as one of the next major sectors in focus after big financial companies kicked off the quarter with generally positive results. Traders can look out for GE Aerospace (GE), RTX Corp. (RTX), and Northrop Grumman (NOC) on Tuesday, Boeing (BA) on Wednesday, and Lockheed Martin (LMT) on Thursday – with all names reporting in the premarket session.

This earnings season comes at a tricky time for the industry as a whole. One obvious driver is the current geopolitical environment, with ongoing conflicts between the U.S.-Iran, Israel-Lebanon, and Russia/Ukraine providing significant stimulus as countries across the world seek to build out and modernize their weapons and defensive capabilities. But the picture is more nuanced than it may first seem because while these conflicts spur growth for the sector, they also result in more practical headwinds such as supply chain issues and high fuel costs (the Strait of Hormuz presents a prime example of the intersection of the two). There also are thorny ethical and philosophical questions, such as what role artificial intelligence should play in weapons systems.

The iShares Aerospace & Defense ETF (ITA) is one potential choice for traders interested in the general sector rather than concentrating on one specific company. ITA is most heavily weighted toward GE (19.1%), RTX (16.1%), and BA (9.4%) with other top names including Howmet Aerospace (HWM), Transdigm (TDG), L3Harris Technologies (LHX), General Dynamics (GD), and Rocket Lab (RKLB) in addition to the other previously mentioned companies reporting earnings.

The chart for ITA saw an interesting few weeks after hitting a notable low close near 211 on Mar. 30, which marked old short-term highs from mid-November and mid-December. Shares rallied almost 12% since then and broke through a downward trendline that began with the all-time highs of 250.65 on Mar. 2. However, a shorter trendline beginning with the aforementioned lows has also been breached, but price has managed to hold on to a supportive confluence of the 21-day and 63-day exponential moving averages near 229.

The options market projects a potential expected move of about +/-13.7 (5.9%) for the May 15 monthly expiration. Notably, the June 18 monthly expiration shows a potential expected move of about +/-18.2 (7.8%) – which closely aligns with the all-time highs and seems to suggest market participants do not anticipate an upside breakout before then

Upside areas to watch for resistance include the old closing high from Jan. 16 near 244 and the all-time highs. To the downside, traders may have their eyes on the relative lows near 228 and the beginning of the most recent gap near 224.

This material is intended for informational purposes only and should not be considered a personalized recommendation or investment advice. Investors should review investment strategies for their own particular situations before making any decisions.

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