3SOF

AAI: HOLD

MESA was up sharply this week so it had a pullback yesterday with the general market that was very weak. The pullback was on lower volume than the advancing days ... this gives me an indication that most people buying is doing it for longer term purposes.

I'll continue holding MESA.

Results were out: AirTran Holdings Reports Record Third Quarter Revenues of $374.6 Million

If oil prices weren't up so much over the last year you could imagine were profits would be. But I see oil prices collapsing to below $40 in the next 12 months, so AAI is exactly the kind of stock that I want.

Maybe today AAI will be able to make a bullish breakout of the ascending triangle on the chart below. That would trigger a technical target of $16.40.

MESA rebounded with the rest of the market. There were no news this weekend for the stock. Today I'll present a chart with a larger time frame. I'll continue holding MESA through tomorrow's session.

QuoteMaybe today AAI will be able to make a bullish breakout of the ascending triangle on the chart below. That would trigger a technical target of $16.40.

It did ! So now the stock has a technical target of $16.40. I'm medium term bullish on the airline sector, I'll continue holding AAI.

We have the entire airline sector picking up, and MESA seems to be leading the group, since it started to rise before all the others. I like to go with the leaders.

Today we've had some minor news from the company:

Mesa Air Group Announces New Low Fares for Hawaiian Service

I'll let the profits run on MESA.

AAI made an ascending triangle breakout and now has a technical target of $16.40. Yesterday was another strong day for the airline sector, and AAI is one of its leaders in terms of share price performance.

Some news today probably with no major impact: AirTran Airways Launches Sale for Travel To/From All Destinations

Showing a 10% profit in just 5 sessions, I'll let the profits run.

Today there was some shift in sentiment towards airline stocks and alternative energy stocks.

Alternative energy stocks seem to be even more volatile than oil related stocks, and they rise when oil rises or is expected to rise. Airlines behave on an opposite way. They climb when oil is falling or expected to fall.

But, if we take a look at the charts, we have two different realities:

- Alternative energy stocks are in downtrends. The move today looks like a rebound in an overall bearish trend.
- Airlines are in ascending trends. The pullback today seems to be just profit taking.

The charts say over the medium term airlines will continue to climb and alternative energy stocks will end up going down again.

So I'll stay with airlines through this possible short term corrective phase.

The company released its October passenger numbers during the session:

AirTran Airways Reports Record October 2005 Traffic

The news brought some buyers to the stock, but the overall profit taking tone around airlines didn't let it rally. 

I see today's fall as profit taking in a bullish trend that will soon resume, therefore I'll hold AAI.

I was smart in staying with airlines, nice move from the sector again yesterday. Some generic talk that may help the sector going forward: U.S. may relax airline ownership rules
DOT officials proposes fewer restrictions on foreign investors to increase capital flow to carriers.

Yesterday's white candle completely erased the earlier red one, with a particular interest: volume was higher on the advancing day. This probably means higher prices to come.

The same news from MESA: U.S. may relax airline ownership rules - DOT officials proposes fewer restrictions on foreign investors to increase capital flow to carriers.

This will add power to airlines, or maybe some sell the news action ... if airline stocks turn lower today I think it will be just a short term issue, longer term I see them as an attractive group.

Furthermore, between airlines, MESA and AAI show relative strength (LUV was a good pick too, I was stupid when I sold it) and those are the kind of stocks that I want.

David am I looking at a 2yr weekly chart wrong, or has AAI finished with a nice cup going back to May of last year? If so, a nice 4+ week handle would allow you to rejoice just in time for Christmas.

Take care of your health David. We all need you and your wisdom.

I know when to take profits on MESA, and it isn't now, not yet. You can check the «take profit point» on the chart below:

QuoteDavid am I looking at a 2yr weekly chart wrong, or has AAI finished with a nice cup going back to May of last year? If so, a nice 4+ week handle would allow you to rejoice just in time for Christmas.

I generally agree with you, but I don't have much knowledge about the Cup and Handle pattern.

QuoteTake care of your health David. We all need you and your wisdom.

Thanks Tirebldr, I'll do that. Until now I was never concerned by health issues, but now I'm starting to get a bit afraid that if I work too much to get rich then I won't have the necessary health to enjoy it (kind of stupid work, I used to watch the DAX futures all day long with the depth of the market, now just about an hour a day, it's like watching a movie, it amuses me  )

Concerning AAI, oh, I wish I were a CEO. The man, Leonard Joseph, exercised options to buy 100,000 shares yesterday at a price of $3.03 and sold them just below $15 for almost a $12 a share instantaneous and zero risk profit 

The good news is that he sold his 100,000 and the stock barely moved. In fact today it advanced further north. These airlines are really bullish (and cheap), I'll let the profits run.

MESA had a minor pullback on Friday, to its medium term ascending trendline, which maybe is too steep for an airline stock, advancing $0.12 per trading day (VPHM style).

Anyway, since I saw the chart of the Dow Jones Transports, breaking out to new all time highs, I knew I had to continue holding these winning airlines. According to the Dow theory, the transports lead the industrials. Also look at the NDX, at a new 2005 high.

The leading groups are transports and technology, so I want to hold stock in those 2 groups.