Friday, 27 June 2008

Baked ALasKa

Almost everything is tied these days to how the oil contracts are performing. The foremost industry that comes to mind that will suffer when we talk about oil is the airline industry. One of the airlines that we're concentrating on is Alaska Airlines (NYSE:ALK).

After peaking at 45.85 in the last quarter of 2006, it has been downhill from there. Most of 2007 was spent on moving sideways but not after suffering a big drop in April 2006 where it has ranged between $21.00 & $28.00. After trading sideways, it broke down below $21.00 in March 2008. Since then, it has consolidated in what looks like a continuation head & shoulders formation inside a descending triangle.

Whatever pattern you are looking it, they're pointing to only one direction: DOWN. The MACD has confirmed the continuation of its downtrend as the lines of the MACD has been oscillating lower under the zero line.

The best time to short sell ALK is at $17.15. The downside target given to us by the chart is $12.57, minimum.

ALK is not an exception. Practically the whole industry is suffering. That has been reflected on the charts of the different airlines listed in the market like United Airlines (Nasdaq:UAUA), and Ryan Air (Nasdaq:RYAAY). The big culprit for this is oil. Rising oil prices have not only made their costs higher, it has forced them to raise prices which also made a lot of people rethink of flying.

With the DJIA suffering its worst June in decades, ALK rides along for its descent.

Saturday, 7 June 2008

What Now, Big Dow?

A lot of people were quite hopeful when the Dow Jones Industrial Average (DJIA) was already at 13,000 and beyond. They were thinking, well that's the end of our bear market. How wrong they were.

After it made its recent high, it's been downhill from there since then. With last night's market, DJIA is back in bearish territory. The last moving average that would've served as a support at 12,500, just didn't hold long enough.

I could be wrong but I think the DJIA formed a rising wedge from end-February up to early May. This rising wedge is giving me a minimum downside target of 11,600 for the index.

Another thing confirming the bearishness of DJIA is the MACD accelerating downwards below the zero line. The bad part here is that the fast line is not letting up yet. Looks like we still have some ways to go down before there would be any kind of rebound.

In this kind of market, there's only two things we can do if we're liquid. Stay away from the market or find a stock worth shorting.