Spirit On a Fast Descent

Just when I thought things were starting to lighten up and gain some strength the market turns around and continues on its warpath. Spirit Airlines is not having a great day today after just dropping down fast in the early hours of the morning.

We started off August with the massive gap down after the impulsive rally that brought price up to $55 a share. Since then we have dropped all the way down to $35 and it looks like we are setting up now for a retest of that support level.

Earnings are not until a few weeks out and they will need to be a saving grace in terms of bring Spirit to new highs from the current levels. Spirit was not the only airline to be dragged down this week as we see American also taking a pretty hard hit also.

Part of this is due to Wall Street Analysts giving poor reviews to the two stocks. Andrew Didora of Bank of America downgraded both of the two airlines as he explained his projections of the industry revenue trends are poised to deteriorate. To add jet-fuel to the fire Jack Atkins of Stephens rated Spirit poorly.

All in all we have seen the airline work towards adding new routes and enhancing the customer experience on board, is all of this to any benefit? Is this just a recovery strategy to be able to regain revenue as the company sees weakening forecast towards the future months.

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Personally I have been bearish over the last few weeks on Spirit. Although after the strong rejection on the $35 I saw some potential for more of a retracement up.

I cut my losses short as price rejected to even break the $40 price level and started its drop down. What are you thoughts on Spirit Fundamentally as a company or technically in the perspective of an investor.

As a reminder my trade ideas are biased to my own opinions and experience. They are not meant to be used as financial advise. This blog is to educate others on the different strategies and trading tools that are available for investors.

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