September 2019 has opened up the doors to the market with new highs for indices all across the board. We see the Dow Jones Industrial Average Index (DJI) up a little over 4% since the start of the month.
We have seen a bit of optimism towards the trade talks between the United States and China. There has been statements that during the month of October there will be more discussion towards coming to an agreement between the two major economic super powers.
President Trump has just recently made tweets pushing the feds to drop rates down to 0% if not lower. This is just adding some more jet fuel to the market.
Many analyst have already chimed in on the idea of having 0% interest rates and have added their ideas on how this could have incredible negative reactions to the American people. What are you thoughts on the idea of dropping federal interest rates? Will the feds cave in to Presidents Trumps wishes or will they hold their ground and keep the rates where they are?
The aviation market has seen a strong start of the week. The last months of the year are typically strong for many airlines. As familes begin planning their vacations for Holiday seasons and sales for retails rise this means that there will be more airplanes in the skies flying people and products.
Understanding the different seasons that occur during the year is essential when determining what strategies are going to be best for the current market conditions. Transportation and Logistic companies often slow down a bit during the summer as many families are on vacation and not purchasing as many goods and products during that time.
On the flip side during summer you have a lot of families that are going on trips maybe out of the country which brings stronger revenue for the airlines on the longer flights. As we start the school season families tend to fly less as they are not going on major vacations with the whole family. The next major push of commercial airline sales will come closer to November and December while transportation and logistics company may start seeing stronger month starting in late September and October.
Atlas Worldwide (AAWW)
Atlas Worldwide has jumped on the band wagon of stocks moving higher over the last two weeks. After major sell off on earnings that we saw near the end of August we are finally seeing some positive numbers. The real question on investors minds is is this just a pullback on an overall downtrend or have we made a new support and are we looking to test and push up towards previous trading prices.
Based on technical analysis we see a down trending channel on the 4 hour chart courtesy of TradingView.
We see how price has been trading within the range between the yellow lines. Price came down below and is now testing underneath the trendline. This can result in a few different scenarios. The first one is the lease favorable where price just rides the trend line and does not break off it and so we are left with poor entry points.
The alternative more desirable outcomes is that price moves away from the trend line retest on the trend line and then pushes towards the direction of volume and momentum. Atlas Air next earnings report is not until the start of November. Fundamentally speaking that is the next major key point to look for when it comes to data that can dramatically change the current price.
Boeing is seeing some light at the end of the tunnel with their B737-MAX aircraft. They have ran over 600 tests on the new software for the aircraft and are working closely with the Federal Aviation Administration (FAA) to be able to get the aircraft Airworthy again. They are looking to start ramping up on production of the aircraft once again as they hope for more new orders to start rolling in once the approval of the FAA is given.
On the fundamental aspect BA is a player that is well favored by many individuals. Their price to Earnings ration is strong and they continue to show new opportunities in their private military developments and new commercial airliners such as the new B777 that is currently in production.
Although we often look at Boeing in the industry of commercial airline manufacture they also play a large role in the defense industry. They work closely with the military in designing new aviation related technology. With government spending budgets for defense being one of the highest areas of where tax-payers dollars go towards this provides an alternate source of revenue for Boeing outside of Commercial airline sales.
Looking at the technical aspect of Boeing we see how we came down all the way to a low of $320 from the March high of just under $450. With a large range where price has traded within for the last year there is a lot of space where price can move within.
If you draw a horizontal line across the board at just about $380 we see a lot of resistance at this price level. Price is currently trading at $382 at the time that I took the screen shot and we can see strong momentum of buying pushing the price up over the last two weeks.
If you are not currently trading Boeing this is a key level to watch for a break, or a reject followed by a test and confirmation. With the current price level having strength short term investors needs to watch to see a confirmation in direction before entering in a position.
Although many investors trade based of technical analysis primarily Boeing is a stock that is currently being controlled by the headlines of the B737-MAX. The flying public needs to regain trust in the aircraft before we can see the price of the stock really begin to take off. Gaining the acceptance of the flying public make take a bit more time than it will be to gain the approval of the FAA.
Southwest Airlines (LUV)
For those who have not traded Southwest Airlines Stock yet, yes their New York Stock Exchange ticker symbol LUV. Isn’t it amazing? Doesn’t it just fall right in place with their company branding and culture?
When I first started trading Aviation stocks and found out that that was their ticker symbol it made me suddenly very interested into looking at their stock and its performance. The stock has a trading range between $66 and $46 currently and price has been trading within this range for the last 2 years or so.
For the long term buy and hold investors looking to hold onto a stock and have it rise in the long term this may not be the best stock overall. If we look at where price was trading near the end of 2017 price was trading at about $54 a share. Today now over 2 years later price is currently trading at $54.77.
Long story short if you would have bought 100 shares 2 years ago and never did a thing with them except hold on and wish for the best you would have gain a total of $7.7 which would have probably barely covered your commission fees.
I really like Southwest for its strong structure of price that allows for great options trade opportunities. Right now price has just broken a resistance and is pushing towards new highs. The next resistance level sits at $58. Price on average moves about $3.5 in the time span of a week. With strong volume to support the momentum of the stock Southwest is a low price compared to previous numbers.
When Boeing gains the approval of the FAA to be able to fly B737-MAX again this means that the fleet for Southwest will be off the floor and in the skies again. With Southwest being one of the largest purchasers of B737MAX I am sure they are looking forward to being able to have those plane operational again.
This week has certainly been taking off and pulling the nose up towards the sky. Now the real question is how much farther can we keep this angle of attack before we start to loose some lift and start to stall out.
Will the B737-MAX coming back into the market light the after burners to this aviation market to bring airline stocks to new highs?
Are we starting to stall out after pulling the nose to high into the sky? After the past few weeks where price has moved relatively sideway we are seeing a spike up coming out of that sideways trend.
Short term basis the market is being pumped with optimism and trade talk and production outlooks that many analyst continue to raise their value ratings on stocks and electronically traded funds (ETF).
I have been getting feedback from many individuals who have asked that I make some videos explaining some of the strategies that I use when trading options. I wanted to get a better idea of who would be interested in participating if I were to host a webinar on Options Trading.
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As always I appreciate your time in embarking on this trading journey as we explore the opportunities that lie in the aviation market. As always all the ideas and thoughts that are shared on this website are the ideas and opinions of my own. They are not meant to be used as financial advice. The purpose of this blog is for me to share my own trade ideas and provide information and education on publicly traded stocks. The information and data on this website is written all by me and I have the right to be able to adjust any of the words on this website at any time if I feel necessary. Please keep in mind that investing contains known risk and you should consult a feduciary financial advisor if you need professional financial advice.