2X $AAL 1D Tech. Analysis!AMERICAN AIRLINES is a patient play for 2 reasons! If it breaks out this channel, we are looking for a retest and confirmation for the drop to continue with volume. Then if it bounces off the bottom and price heads to the top of the channel then we get a even better entry on this setup! Be patient and execute!
AAL trade ideas
AAL short - UPDATEUpdating my AAL earnings idea:
As you can see, we got a confirmation of the described scenario.
It was acceptable to sell intraday using the VWAP pullback point.
Also on the second day we got something similar to a flag, which has worked out.
But of course, being in a position already on the first day, I would not add on the second day.
These Two Airlines Should Be In Your PortfolioUp first is American (NASDAQ: AAL), part of that group of majors who’ll be hit hardest by the headlines from London. Their Q2 earnings are due out next week and investors will have a clearer picture of the internal numbers then, but for now at least the trends around its long-term stability are positive. Just yesterday, the company told investors they expect their quarterly revenue to be up 12% versus the same quarter in 2019, which was a welcome update. Airlines, among other front line industries affected the most by COVID, have been skipping 2020 when doing like for like quarterly comparisons, and this will have been a solid stat for them to share.
The other carrier that should definitely be on your watchlist, if not in your portfolio, is Southwest (NYSE: LUV). This column has written about the US flier’s consistent strength versus its more internationally focused peers several times in recent years, and it’s a tone we’ll be continuing here.
Whereas American shares are still down more than 50% from their pre-pandemic levels, Southwest shares are ‘only’ down 30%. This suggests Wall Street sees much more inherent strength in them that could justify their inclusion in the right kind of portfolio.
Indeed, it was only yesterday that the team over at Susquehanna upgraded Southwest shares from a Neutral rating to a Positive. This change was one of several they made during a sweep of the airline sector, a sweep that for context saw their price target on American shares dropped from $19 to $15. Analyst Christopher Stathoulopoulos said with the changes that “while we’ve yet to find any cracks in airline booking data, we believe that at some point consumers will have to contend with the economic reality of higher air fares, outsized general inflation, and potential layoffs in select industries (e.g., finance, tech, and media) into 2023."
They see this affecting the non-budget flier like American more than budget friendly fliers such as Southwest, whose various revenue initiatives and its break into corporate travel should bring fresh support to its share price. Southwest is also seen having ample liquidity to ride out a downturn, something that previous bullish comments on the stock have highlighted as well. Their shares are up about 14% from their low of last month and also on track to test the downtrend that’s been in place since their recovery peaked in April of last year.
It’s fair to say that both stocks are worth keeping on your watchlist, and depending on your tolerance for risk and investment timeline, there’s an argument for both being part of your portfolio.
AAL: Travel is Back!American Airlines
Short Term - We look to Buy at 13.78 (stop at 12.30)
Although the bears are in control, the stalling negative momentum indicates a turnaround is possible. The trend of higher highs is located at 13.40. There is scope for mild selling at the open but losses should be limited. Further upside is expected although we prefer to buy into dips close to the 13.40 level.
Our profit targets will be 17.89 and 19.00
Resistance: 18.00 / 21.00 / 25.00
Support: 13.40 / 11.00 / 9.00
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ANALYSIS ON W1 Airline stocks have see a massive hit since the current economic downturn but could it be the climax basing for the next cycle
The 13-year cycle from 2008 completed a 661 week trend and market is forming a base for a 5-year bull market.
Repeating market patterns give us a clue of what we can project after completion of the cycle
1896 - 1903 7-year cycle
10/2004 - 05/2005 7- months cycle
06/1994 - 12/1994 6-months cycle
In the 3 occurrences there was a bull market that followed averaging 5 years
Giving that the next cycle node is in 2028 we can expect the bottom anywhere between now and March 2023
AAL - 3 Long scenarios - Fly little bird, fly 3 Long scenarios
Fundamentals
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General
One scenario developing doenst invalidate the other. Would trade one after another if it should happen - or all at the same time.
Scenario 1 (Green arrow)
Target
Next resistance level (level 1).
Confluence with the 50% level of a monthly range.
Requirements
- Price closes above buy zone 1
Invalidation / SL
- No break under buy zone 1 AND creating lower swings
Time duration
Days, weeks, months, years... ;)
Scenario 2 (Orange arrow)
Target
Next resistance level (level 1).
Confluence with the 50% level of a monthly range.
Requirements
- Price dto buy zone 2
Invalidation / SL
- None, this is a possible longterm hold
Time duration
Days, weeks, months, years... ;)
Scenario 3 (Blue arrow)
Target
Next big resistance level
Requirements
- Break above level 1
Invalidation / SL
- None, this is a possible longterm hold
Time duration
Days, weeks, months, years... ;)
Good luck
AAL Bullish inclined naked puts 20 May expiry (May Track 1)Whats The Plan/Trade/Thought
My original intention was to leverage the volatility from the rate increases to enter VXX. However the BP (Buying Power) requirements were pretty high. Making IT less attractive in risk and reward
The airlines sector are seeing signs or recovery with surges over pre-pandemic level in March. United Airlines (21 April) have forecasted a profit this year.
Looking at the Airline stocks with similar prices movements. I decided to sell puts with AAL as I expected traders to jump into this sector with obvious recovery elements. Especially since Tech companies have been victim number 1 with the rising interest rates.
I also saw markets rising after Powell’s address and I figured the volatility was all done. Boy was I wrong haha
I Feel
I’m entering this post entering the trade. Hence my views now are slightly impacted with what has transpired on Thursday and Friday.
I feel I have made the right decision based on the information I had. However Given that my overall stance was that it was a bearish sideways market. 2/3 of my trades should not be bullish. I am not good at predicting the market, so I must be aware of the probabilities across all my trades and not just each individual trade
In my reflection, how I could have also structured this is, riskier trades should be tied to closer expiry dates
Imagine Yourself Taking The Other Side
Right now post entry, post 5,6 May blood bath. It must feel pretty sweet
Imagine Yourself As A Neutral Observer
In all states (Bullish, Bearish and Neutral). We all agree that the market is ranging and is highly volatile. As such the trade currently is not moving entirely unexpectedly. I think was was unexpected was the Bullish market wide move, followed by two red days
Look For New Information
Current bearish price action is a market wide drop. There could be recovery or it could continue dropping. We have some allowance, but it’s getting tighter
How Do I Feel Now
A little worried about Monday, but I know this trade individually is made of sound decision elements. However as part of an overall monthly trade structure, this new trade weakens it
Trade Specs
Sold 350 Puts @ 0.13 - Strike 15.5
% to Strike is 17.5%
ATR IS 5%
BP used 54k
Max Gain: 4322.5