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.

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