One of the top stories of the day on Tuesday was a real shocker for the aviation industry. Reportedly Dave Calhoun, the CEO of Boeing (NYSE:BA), opined that it is “likely” that one of the major U.S. carriers will go out of business in 2020.
That’s a dire prediction, and it’s coming from the chief executive of a major plane-building giant. Calhoun even went so far as to name a specific month. He said, “You know, something will happen when September comes around.”
Boeing spokesman Gordon Johndroe later tried to backpedal on the CEO’s statement. He claimed that Calhoun was ” … speaking in general about the uncertainty in the sector, not about any one particular airline.”
But it’s too late for backpedaling as the cat’s already out of the bag. Should traders bail on their aviation stock holdings, or even short-sell those stocks? It’s an important question, so Wednesday’s big stock charts will feature airline-sector names that might encounter serious turbulence in the near future.
JetBlue (JBLU)
With a trailing 12-month price-to-earnings ratio of 9.52, JetBlue (NASDAQ:JBLU) stock might seem attractively valued. On the other hand, sometimes low valuations occur because companies simply aren’t doing well financially. Maybe the first of our big stock charts will provide some clarity as to whether or not JBLU actually offers a strong value proposition.
- That $8 level is like a magnet for JBLU stock. It’s now the third time that the price has recently visited that level. The buyers swooped in and carried the stock back up in the past, so maybe they’ll do it again this time.
- After Tuesday’s red candlestick, JBLU stock is below the 20-, 50-, and 200-day moving averages. This fact is in the bears’ favor, so the buyers have some catching up to do.
- The small symmetrical triangle could be considered the flag portion of a large bearish pennant. Oftentimes these configurations resolve to the downside. Therefore, it’s wise to proceed with caution when it comes to JBLU stock.
American Airlines (AAL)
Income-focused investors should appreciate the fact that American Airlines (NASDAQ:AAL) stock offers a generous forward dividend yield of nearly 4%. But then, that wouldn’t provide much consolation if the share price falls to new lows.A glance at the AAL stock chart may help us to decide whether we should anticipate a turnaround anytime soon.
- It appears that AAL stock is clinging to the $9.60 level. A recent series of small, sideways-moving candlesticks suggests that volatility has calmed down somewhat.
- Unfortunately for the bulls, AAL stock is trading below all three of the major moving averages on the chart. Moreover, those three moving averages are tilting downwards.
- A small descending triangle pattern on the chart has been forming since March. The bears will want to see AAL stock resolve downwards below the $9.60 support/resistance level.
Southwest Airlines (LUV)
The Boeing CEO’s words echoed throughout the markets. Which one of the airlines will fold this year? Will it be Southwest Airlines (NYSE:LUV)? It’s perfectly understandable if shareholders are concerned. Let’s home in on the last of today’s big stock charts and decide for ourselves if there’s hope for a recovery as the year progresses.
- We can see that the LUV stock price is moving towards the $25 level for the second time. The bulls will really need to show some conviction in preventing the share price from breaching that level.
- The recent candlesticks are all below the three important moving averages on the chart. The prospect of a real turnaround will depend on the bulls pushing LUV stock back above those lines.
- Consider $30 as the resistance level to watch for now. If LUV stock can break above that price, it might then be considered support instead of resistance.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
