LONG AIRLINES ACDVF, AC, JETS, AAL, DAL

Oct 9, 2023

AC Technical and Fundamental Reasons for going Long AC Air Canada, and AAL and JETS and DAL:
We are in a tightening 3 Month range in all airline names (And even in broader markets)

Given how we have come straight down from the highs, a multi week bounce with legs is likely and positioning in here would be a strong Risk / Reward entry.

While DXY the dollar is set for monthly consolidation along with oil (Despite the knee jerk reaction to Israel which will likely fade. Markets are holding up well and have priced in peak rates with yields all coming down sharply after capitulating last week.

While DXY OIL and Yields drop.
Airlines are huge laggards (and after good selling and bad news being well priced in) it is time for major bounces. It is a highly volatile sector so a big drop the way it did warrants a big pop.

With capitulation following analyst downgrades, and company outlook drops to adjust estimates for rising fuel costs and labor costs. The discounts of this bad news is very well priced in and has capitulated with huge volume climaxes Monday after the Israel situation over the weekend.

As with 9/11 and Russia invasion, the knee jerk reaction last about a week, before the entire dip is re bought up. Assuming no escalation in Iran to push oil even higher, airlines will care most about earnings and forward guidance to see demand outlook for Q4 and 2024 company guidance.

With DAL reporting Thursday and more coming in next few weeks, I'd expect that the reported results for Q3 are very strong, and more importantly that Q4 and 2024 outlooks won't be as bad as markets are pricing. Resulting in a swift 10-15% bounce on many airline names.

Again: The bad news is very well priced in, and markets will begin to find good value for entrance pre earnings and post earnings as we are very oversold and surprised to the upside with earnings that weren't even close to as bad as markets are expecting as well as strong forward guidance.

AAL
AC
JETS
DAL

Oct 9, 2023

Note

Look at the Weekly Chart for Clarity - Bounce to Weekly EMA 12 expected