Monday morning and the market is off to a strong push to the upside right on the open of the bell. Form last week we saw some mixed days with an overall bullish week as the NYSE: DJI closed higher by 1.0%.
In the start of the day we are seeing a push near .80% gains in the first hour of the market which is quite optimistic in our current sideways trending market.
After the weekend there can be a lot of news and company events that can trigger for the market to dramatically spike in price. There are times when on Monday morning as the market is reacting to news from the weekend and trades from the Asian and European market we see price “gap.”
See right at the start of the day how price “gaps” from $26951 to $27039 this is very common to occur after weekends. If I am trading the swings in the market as compared to intraday trading or long term trading I would be extremely cautious over holding trades over the weekend.
If you are not prepared to appropriately prepare and protect your account in the event of unpredictable gaps in the market it can potentially result in loss of capitol. From the technical perspective one could have drawn a trend line from the previous highs on the close on Friday and interpreted a downtrend pattern.
It is not until the market opens up on Monday morning that we can see what the reaction from the weekend will be. I have learned that it is best to not rush into trades on the start of the week Monday mornings.
Once the market has had time to react and settle in then we can look to understand the movement that has played out and then determine the next step. Getting back into the market from the weekend should not be a process that is rushed and you should use it as an opportunity to plan and identify potential trade set ups for the week.
Last week was a strong week on earnings from the aviation industry and for the next few weeks we have plenty to cover.
Lets look quickly at some of the stocks planning to release earnings for this week and set up some potential trade ideas.
Ch Robinson Worldwide Inc
Rotor-craft sales have been up about 3% for the year. Based on just looking at the technical aspect of the stock we can see how the month of October has been bullish as it has pushed from the low of $80 up to the current price of $90.
With a revenue forecast of $3.95 billion they are projected a slightly tighter quarter than the previous one. Looking at the last 3 years the 3rd quarter earnings shown to have been above forecast.
The luxury market is still growing strongly in the current conditions. The outlook for private and business aircraft is extremely strong and their sales projections are continuing to remain optimistic.
Their earnings are schedule to release out this afternoon after the close of the New York Stock Exchange. Overall we are looking bullish for Robinson on the long term as it is a great dividend yielding stock with consecutive growth. These next earnings will play a strong part in determining how the next few weeks will play.
The last earnings report we had from Atlas brought us down to the low price levels we are currently trading within. Back in the month of July we saw Atlas Air’s stock price rise up just above $45. Shortly after hit the milestone earnings report for Q2 came out and trade tensions were at their peak.
This was hurting Atlas Air dramatically who focuses in cargo. As less merchandise is being expedited through the skies to consumers due to high tariffs this meant less cargo on their aircraft. Sure enough the talk and optimism around the trade war has been talked about so there is some slight correction as we see some major support level develop down near $21.
Although earnings this quarter may not be the stronger what is important is to see how the react from the loss of business. Are they adapting and looking at other sources of income. Are they able to define how they will remain profitable through the global economic tension.
The great part is that there is a lot of room to the upside. The previous trading levels for Atlas is between $25-$45 and we are currently below that price level.
Now just because we are below the price does not mean it is a perfect time to enter. The ideal confirmation to justify a bullish continuation would be moving above the yellow channel line and supporting a move upwards.
Skywest is planning to release their earnings tomorrow and they recently had a spur of buying orders come in recently. The nest resistance level is sitting at around $62 and we are looking long term bullish towards testing this level again.
These earnings have the opportunity to push the price up past the resistance level and break up towards making new highs. Currently we have been seeing Skywest trend sideways within a tight range. Seeing strong numbers release from the earnings report is going to be key in getting a breakout move.
Waiting to see some word from the company is going to be key before making any spontaneous decisions. Its important that when we look at earnings reports for the perspective of trading that we do not develop a personal bias but instead look at what is reported and make decisions accordingly.
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What are your thoughts on the earnings reports for Atlas Air, Skywest and Ch Robinson? What trades are you seeing up this week?