AC trade ideas
AC possible Call Option Word is that the Feds are about to step in and give AC a "hand".......you decide....Building Financial Resiliency One Block at a time.....#FranklinCap Hit the "Like" button to see more like this from Franklin Capital...Thanks!
No bail out can help this one.How are you going to implement social distancing in an air plane? All the seat would have to be first class?!
Possibly a long set up in the making.I am expecting the stock price to up go a little bit and then a pullback. After, the real move might take place. Trade with caution!
AC - HS Pattern?Just a prediction, but it looks like AC is capable of making a HS pattern.
If that could be the case, it could mean potential upside target to approx. $18-20 area for the right shoulder high in the short term.
This is if it could keep within the larger upside trend line.
Hopefully it doesn't break 15.70 on the downside. If the HS fails to complete and we break below, it could mean a return to March lows.
Caution: this is just an opinion, do not trade on this. My skin in this is worth a cup of coffee for 2 friends.
Air Canada 1D Chart AnalysisTechnical Analysis of Air Canada 1D Chart
This time we observed an Ascending Triangle pattern with Three confirm bottoms and Two confirmed tops (Triangle in Yellow). The triangle has now broken out of the downward direction with a corresponding higher volume of selling, which almost confirms the new downtrend with technical analysis (shown in Purple). Generally speaking the height of the triangle is what should drop in this instance (Shown in Green).
As we mentioned previously in A&T Corp. we believe in combining Fundamentals with Technical Indicators to place our trades, we will now look at the Fundamentals of Air Canada stocks.
Fundamental Analysis of Air Canada
The company boast a significant Moat in the Canadian Air space, however, due to current COVID-19 situation the airline is draining cash rapidly.
Latest earnings have revealed Air Canada lost over $1.0 B in the first quarter of 2020. Now, keep in mind that only the last 15 days of March were the most significant in terms of trouble due to Canadian Governments asking of travel bans. That means only 15 days out of the 90 days caused the majority of the problems.
In the 2nd Quarter we can expect another significant blow to the company's balance sheet but this time with 90 days of shut-downs. However, due to lay-offs and parking of jets the company managed to do some damage control in terms of draining cash. So we do our math as the following:
Given,
15 days = $1.0 B loss
Therefore,
next 90 days = $6.0 B loss, however, due to stopping flights and massive lay-offs this will be significantly reduced. Therefore, we say it's only 1/3 of the estimated.
or, next 90 days (Strict measures) = $2.0 B in losses.
By the time 2020 is over the company will loose it's cash pile of over $5.0 B and will be sitting on a pile of $9.0 B (Current liabilities). The book value will be reduced down close to $0.0 or may be even negative.
Additional Notes:
Once, lock down eases throughout Canada, we cannot expect people to travel around freely and go back to normal. This will still continue to impact the airline industry with reduced travelling from Tourism and Businesses . Now, we all may know that Business class passengers are the ones that makes money for the airline companies and with them at home (Using Zoom) the flag carrier will continue to hurt badly.
Our estimates suggests that without a vaccine for Corona Virus the airline industry will continue to drain cash. Which brings us to the next question, what about a bail-out from the Trudeau government? A bail-out can have different structures, recent bail-outs have only helped corporate bond holders and not common stock (share) holders. This would mean in case the company is about to go bankrupt and a government bail-out comes, it still won't help us common stock holders.
Bottom Line:
Using a combination of Fundamental and Technical Analysis we at A&T are shorting it in the medium term with short positions activated at $21.0 and will be open to $13.0. Short positions will be protected with stop limits at jumping back inside the triangle @ $19.95.
Fundamental investors will see the problem and will stay away from the stock in the mean-time. While, retail investors with buying the dip mentality will continue to pour money in without understanding the underlying risks associated with this stock at the moment.
$AC Air Canada Bullish Reversal Pattern $27 target
Rising 3 valley pattern developing
above $22 more bullish taking out previous peak
Indicators bullish with room to run
daily 50MA at just under $24 keep in mind
WHICH PRICE A NOVICE INVESTOR MUST BUY AIR CANADA-04-17-2020******************************************************************************************************************************************************************************
Decisions to buy, sell, hold or trade in securities and other investments involve risk and are best made based on the advice of qualified financial professionals. Any trading in securities or other investments involves a risk of substantial losses. The practice of “Day Trading” involves particularly high risks and can cause you to lose substantial sums of money. Before undertaking any trading program, you should consult a qualified financial professional. Please consider carefully whether such trading is suitable for you in light of your financial condition and the ability to bear financial risks.
************************************************************************************************************************************************************************
WHAT CHART PATTERN AIR CANADA IS PROBABLY BUILDING?
The forex rising wedge (also known as the ascending wedge) pattern is a powerful consolidation price pattern formed when the price is bound between two rising trend lines. It is considered a bearish chart formation that can indicate both reversal and continuation patterns – depending on location and trend bias.
source:https://www.dailyfx.com/education/technical-analysis-chart-patterns/rising-wedge.html
WHEN SHOULD WE TAKE POSITION?
WE CAN TAKE POSITION AT ANY TIME IF YOU ARE A GOOD INVESTOR AND YOU CAN ANALYSE QUICKLY WHAT THE MARKET IS GOING, ACCORDING TO THE PREDILECTION WEDGE PATTERN HAS 5 POINTS SO WE CAN TAKE POSITION IN POINT B, C, D, E BUT THE RISK LEVEL IS NOT THE SAME
B IS STRONGLY HIGH
C IS HIGH
D IS MEDIUM
E IS LOW
THE RECOMMENDATION FOR INVESTORS AND NOVICE PEOPLE WILL BE TO WAIT FOR THE BEST TIME AND THE BEST TIME WITH A LOW RISK IS THE POINT " E BECAUSE THE MARKETS WILL REACH A GOOD SUPPORT LEVEL TO CHANGE BEARISH TREND TO A BULLISH ONE.
IN CONCLUSION, THE BEST PRICE IS AROUND $8-$6 .
AC 1D Chart AnalysisThis is an updated Air Canada 1D chart from A&T Holding Corporation.
So as per our previous analysis, the stock has broken through the downward moving triangle and now it's taking the W-shape as shown above. Our revised target is a $30-32.00 range for long positions.
Shorts should set a stop-limit below the above trading zones shown.
Please feel free to use the comment section below to let us know your thoughts, opinions, and/or questions.
