The market has been extremely volatile over the last few weeks. President Trump has been firm on his stance in regards to the impact that the Chinese has over United States Markets.
The release of tariffs over imports have impacted many tech companies and manufactures. We have seen a great deal of business in the United States affected by the increase in price of Chinese goods.
One of the many areas that has also experience a great loss has been the Logistics and Transportation Sector of Aviation.
Companies such as Atlas Worldwide (AAWW), FedEx (FDX), UPS (UPS), Forward Air (FWRD) and others have experienced slowing sales as less companies are rushing over merchandise directly from China to the United States via air.
Let’s take a look at some of the technical regarding a few of these stocks after the major sell off that occurred in the market today on August 14, 2019
Atlas Worldwide (AAWW)
Just last week we took at look at Atlas Worldwide and we crowned it as biggest looser. Once again Atlas has stolen the throne and hold the crown for biggest looser in the aviation industry today. Over all Percent change went to about 8% to the down side. This is certainly not looking great for Atlas since earnings have come out.
Tension is getting larger as the demand for rushed cargo from Asian countries have declined greatly. Production is down over the year and overall the need for this type of service is not as predominant as before.
We have not had a strong year for Atlas and as the market overall continues to push towards the downside I would look for Atlas to continue to follow along.
On the long term play yes we are nearing towards price levels that would be attractive to be able to secure Atlas Worldwide for a cheaper price to allow for trade tensions to balance out and the price of the stock to rise. That would be an optimistic play in todays market although there is nothing to say that if a trade deal is secured tomorrow that we see all these stocks begin to sky rocket up.
It is a very difficult time for long term investors as they are uncertain on entering long position as there is still no resolution to the current issues. Long term investors and fund managers are going to wait until the market shows stronger signs of growth for the long term before entering in new position.
Just today on T.D. Ameritrade Network T.V. one of the guest speakers who was the owner of an investment fund explains how they have pulled out of their position with Boeing and other aviation stocks due to the current tension in the aviation market as a whole.
In terms of Atlas Worldwide I believe there is still room to head down in the days to come unless there is a change in the market environment.
I would be looking to hold any short position currently open on Atlas. I Personally entered a few Put Contracts on Atlas and have been allowing the price to continue to drop in the direction of the trend. The channel I drew above is my current price target.
Again nothing is guaranteed and this is just a documentation of my own trades. This is not in any form me advising you to invest or trade in Atlas Worldwide. This is only a documentation of my own trade ideas and the trade strategies I am using.
Today FedEx was one of the many other US stocks that experienced losses today. This one was one that I have been tracking for a few days now waiting for the appropriate moment to enter in on the sell of the market.
Yesterday the market experienced a major rally push up right at the open of the bell. Something about the impulsive move did not settle well with me and I felt it was the right opportunity to start looking for the retracement of the impulse push up.
Shortly after the open of the market I began to purchase a few Put Options. The one in specific that I purchase was the $155 Put with the 16th of August, 2019 expiration date. When I purchased this option just yesterday the premium to be able to purchase the option was $0.36 a share.
The stock was trading above $160 at the time making this an out of the money call. As the market opens up today and we see price open at a new low bringing the market to a shoot down after yesterdays rally the value of our option shot up in price.
Price continued to drop down as stocks drop all across the board. The trade that I entered at $0.36 a share rose to the value of $2.44 a share. This brought a 577.78% return on our investment in less than 48 hours. This was a naked Put and so the potential risk that we had on this trade was the initial investment on the contract it self which was the $0.36 a share.
These kind of trades do not occur everyday although being prepared to be able to take action on when the market makes dramatic movement requires a great deal of preparation and patience. Trading options involves risk just like any other type of investing. The reason why I enjoy trading options over buying and selling the stock it self is the return on my investment.
Had I been holding onto FedEx shares long term my investment would have lost 3.61% of its value today. Keep in mind that to purchase 1 share of FedEx would require an investment of $154.72 based on current market conditions.
Based on the current down-trending channel that I have drawn we can see that price has just broke back into and retested at the edge of the channel. If we continue to see price reject the next trend line that I would look to see price continue to push down towards the center line of the current trend.
Although we are sitting at a major support level based on previous lows the current fundamentals of the market are pushing price to new lows currently and based on the global environment for cargo airlines the outlook is currently grim.
Long term investors can look for potential prices that provide them with profitable entries for holding stocks on a long term basis. Although many are being cautious with US stocks currently many are looking out to gain positions on stocks prices lowering.
For current conditions trading the market on a more short term basis is providing incredible returns due to volatile movements in the current market. There are various strategies that can be used during these market conditions that would generate incredible returns.
Aviation Stocks are the cornerstone to many industries in our global economy. Understanding how to trade Aviation stocks is a great tool to use when trading the U.S stock market as it represent such a great portion of our market.
Make sure to follow @Whereishakar on trading view and stock twits to get up to date current trading news and analysis. To get connected to other investors in a private mastermind group send an email out with the title Trading Mastermind for more info.