LCC

[AussieTrader]

Profile:

US Airways Group, Inc. (US Airways Group) is a holding company whose primary business activity is the operation of a major network air carrier through its wholly owned subsidiaries, US Airways, Inc. (US Airways), Piedmont Airlines, Inc. (Piedmont), PSA Airlines, Inc. (PSA), Material Services Company, Inc. (MSC) and Airways Assurance Limited, LLC (AAL). As of December 31, 2007, US Airways Group offered scheduled passenger service on approximately 3,800 flights daily to 230 communities in the continental United States, Hawaii, Alaska, Canada, the Caribbean, Latin America and Europe. During the year ended December 31, 2007, the Company provided regularly scheduled service or seasonal service at 137 airports. During 2007, the US Airways Express network served 201 airports in the United States, Canada, the Caribbean and Latin America, including approximately 82 airports also served by its mainline operation.

Trading Plan:

This is an oil / airlines technical play. Airlines have bounced back hard these past few sessions as oil has fallen.  A lot of airline charts look ripe for breakout and you could select any one of a number JBLU, UAUA, AMR, DAL etc.

The idea of the trade is a short term momentum run. We will buy around the open anticipating continuation. An initial stop will be at $4.15 just below yesterdays low. Putting a stop in straight away due to the volatile nature of this sector.

Trade Plan:

BUY LCC at or around the Open.

[AussieTrader]

Update:

Airlines were out the gate fast yesterday, but very quickly faded and many gave back the gains and some. LCC held up pretty well amongst its peer group, but also succumbed to the selling pressure.

I was looking for immediate continuation from a technical pattern point of view, but despite that not eventuating the chart remains very bullish and still in breakout continuation shape.

I think it is worth it from a risk reward perspective to keep the position but with an adjustment in the stop to $4.25 which sits below yesterdays low, the ascending support and short term moving averages.

Trade Plan:
HOLD LCC with STOP at $4.25

[AussieTrader]

Update:

Oil goes down, airlines go up. That is the fundamental play going on here.

I want to let profits run here and will leave the stop where it is for today out of the way.

Pre market seems to be looking good around the $6 area.

Trade Plan:

HOLD LCC with Stop at $4.25

[setravis]

AussieT...Nice work, Applaud !
I like this Spec play very much.
This is above its 50-day MA and is seeing heavy buying, oil prices are falling,
looks like a good possibility it will bounce off 10.
I strongly believe US Airways is well positioned to survive and thrive in the future.

[AussieTrader]

Update:

Thanks Setravis, yes this play is working nicely, all those airlines I mentioned in the original post would have been a good position.

LCC broke decisively out of the consolidation pattern so now we can adjust our stop a bit. Again trying to allow profits to run here.

Trade Plan:

HOLD LCC with Stop at $4.50

[berloga]

Hi Aussie,

  In your opinion, will LCC share price follow or reflect the current oil price going forward? I know oil retreated sharply, but what if it rises again?

  In general, what is a good indicator to watch that tracks the oil prices? Also, could you please comment on a possible outlook for the oil price (I believe which way USD goes may affect the price as well...).

Thanks!

[AussieTrader]

  In your opinion, will LCC share price follow or reflect the current oil price going forward? I know oil retreated sharply, but what if it rises again?
  In general, what is a good indicator to watch that tracks the oil prices? Also, could you please comment on a possible outlook for the oil price (I believe which way USD goes may affect the price as well...).

Hi Berloga, although airlines have traded inversley in tandem with oil that will not continue forever, longer term it will be about passengers, profits, growth etc. The plunge in airlines stocks was so overdone we are basically seeing a bounce back to more appropriate price levels.
There are many ways to watch oil price $WTIC chart tracks crude continous contracts for example. This CNN site http://money.cnn.com/data/commodities/ tracks commodities including oil, which might be of interest.
What will oil do? I don't know, I don't profess to be a macro economist. I will look at overall sentiment and base my thoughts on that, yes the $ will very much come into play there as well.

Update:

If oil indeed catches a bid and rises some sure this will probably pull the airlines back some. I see airlines still with room to move, so we want to try and capture that. For now will just use our trailing stop and adjust upwards to $4.85.

Trade Plan:

HOLD LCC with Stop at $4.85

[AussieTrader]

Update:

Fundamentally I think LCC has ground to catch up with its peer companies in the airline sector. Comparing some of these companies in terms of how much they have lost in stock price value over the past 18 months I see the following:

LCC - 88%
JBLU - 60%
UAUA - 78%
AMR -  73%
DAL - 58%

This has me thinking 2 things 1) In this whole airline correction LCC has some way to catch up, which would help explain how even on days when other airlines consolidate or are weak LCC outperforms. 2) A continuation of the airline recovery combined with on-going oil weakness makes taking another airline position or pyramiding into LCC again a definate prospect.

Looking at the chart I see LCC consolidating its gains below the $7.00 resistance zone. That area runs from $7 to $10 (March to May trading period). A volume break of $7 could well see LCC move quickly through that zone to the $10 ceiling.

For those not yet in LCC, a break of the high from Wednesday at $7.18 would make a logical entry point. Actually looking at pre trading now I see that is happening now, oil down, airlines bidding up.

We'll adjust the stop up a bit today following this action.

Trade Plan:

HOLD LCC with Stop at $4.95

[setravis]

Very nice indeed.......
Aussie, Great work, Applaud !!! 


Airline stocks soar as oil falls...
Continental, US Airways, United Airlines stocks jump more than 10% as oil plunges to three-month lows.

Airline stocks went sky-high on Friday, as oil prices - the industry's nemesis - plunged to three-month lows.

"As oil is unwinding, the airlines are going back up," said Bob McAdoo, airline analyst for Avondale Partners.

In general, the money-losing airline industry has been squeezed by higher oil prices and the Amex Airline Index (XAL) is down 32% this year. But that's not counting the gains on Friday, when the index rose more than 6% in the afternoon.

Some of the individual stocks, such as Continental Airlines (CAL, Fortune 500), US Airways (LCC, Fortune 500), and UAL Corp (UAUA, Fortune 500)., the holding company for United Airlines, increased 10% or more.

[AussieTrader]

Update:

Thanks Setravis.

A good day for airlines and LCC in particular as it totally outperformed its peers on the day, interestingly so did UAUA both of which have been hit hardest in the downturn and thus have most potentially to claim back.

I have thought long and hard about profit taking perhaps a percentage of the overall position, but have decided for now to adjust the trailing stop behind the action. LCC seems to be on a mission to keep on going so why interfere with that. Adjust the trailing stop to $5.55, just below last weeks consolidation period and outside normal volatility.

Trade Plan:

HOLD LCC with Stop at $5.55

[Terliso]

Very strong resistance around 10.50 area, that also near to 200 ema & 200 ma......LCC flew from $1.45 to $9.79 that is 575% NON STOP .........in my opinion LCC is SOON due for pullback. T2T

[AussieTrader]

Update:

Hey Terliso, timely input as always many thanks.

Yesterdays price action took me by surprise, but then I shouldn't be too surprised based on what these airline stocks have been doing of late. Oil is obviously the major influence here, but yesterday we also had Morgan Stanley going positive on airlines which helped trigger some action:

'Airline shares rose after analysts at Morgan Stanley said they expect the industry to turn a profit in 2009 if the decline in oil prices continues. "We believe this shift in sentiment, combined with a wave of upward consensus estimate revisions, is supportive of legacy airline share prices in the near-term," analysts wrote in a note. They expect US Airways Group Inc. (LCC) and UAL Corp. (UAUA) - parent company of United Airlines - to "benefit most near-term from favorable expectations revisions. Morgan Stanley analysts call oil's move the past month to $115 a barrel a "game-changing event for the industry"

Today JP Morgan raised their position on LCC from Underweight to Overweight.

Technically LCC surged hugely trading right into the resistance zone I have previously mentioned almost touching $10. Then as resistance was too great and intraday profit too large sellers came to the fore and LCC closed at $8.39. This morning LCC and all airlines are active and LCC is trading around $9.00.

Now, I agree with Terliso about the resistance, you can see the 200sma on my chart which will act a bit like a magnet and ceiling all at the same time. $10 will be tough to break, not impossible, but tough.

Time I think for a profit taker. I will be selling half our LCC position if it trades above $9.00 today. The remaining half will be on trailing stop at $6.65.

Trade Plan:

Sell half LCC position if it trades above $9.00
HOLD half LCC position with Stop at $6.65

[AussieTrader]

Intraday Update:

Sold half  position at $9.35.

Remaining half  open with stop at $6.65

[setravis]

OIL continues its fall from GRACE? $147-115 in just 3 months.

This will be an amazing week. Which stocks have the greatest chance of going up if OIL continues its fall from GRACE? $147-115 in just 3 months.

Fortunes will be made in the coming weeks. The answer: AIRLINES and transportation companies. The ones with solid fundamentals include LCC and UAUA. Look at the call options in the money if we have a pop in oil prices or large downdraft in DOW based on bad financial news that which has little to do with the above symbols.

There was a fear in the market that oil was headed to $200 and the Airlines would have to file for bankruptcy protection and the world was coming to an end. The end of the world has been delayed because of recent outsourcing and cutbacks. We simply do not have the available manpower.

Given the above can OIL go to $200.00? Any disruption on the oil pipelines around the world including Zimbabwe and Russia or the current two tropical waves are coming off Africa could push oil higher. Since many oil rigs are located in the Gulf of Mexico.

Are we closer to $200 or $100? I guess $100.00 and will plan accordingly. If the trade goes against me I will be out. .

[AussieTrader]

Update:

We took profit on half our position as planned above $9.00, $9.35 in fact.

There is nothing realy to add for todays update. I'll be looking for LCC to consolidate its current position in the $8 to $9 range before moving onwards.

I am going to move our stop up again  just below the $7 breakout zone where we had the consolidation last week. The new stop will be $6.90.

Trade Plan:

HOLD LCC with Stop at $6.90