AIR - Air NZ.

**beacon** · 24-07-2008, 06:38 PM

Things are improving, yet sentiment deteriorates. Which will win? Much as I hate it, reduced holding today ...

**Dr_Who** · 24-07-2008, 07:41 PM

Originally Posted by beacon

Things are improving, yet sentiment deteriorates. Which will win? Much as I hate it, reduced holding today ...

My exact thoughts. I couldnt make up my mind las week to buy AIR at $1.10 or not. I was so close to buying some shares, but was weighing the weak economy with possible lower short term oil price movement.

**BRICKS** · 25-07-2008, 08:55 AM

BRICKS returns to Oz on the 5th AUG after his winter stint in NZ but this time flying QANTAS so why well AIR has cut out 4 flights to SYDNEY smart move and its the peak hour flight of 4.15 PM time to up the numbers on other flights, Fly QANTAS..

**Phaedrus** · 25-07-2008, 01:03 PM

This long-term AIR chart provides 3 perfect textbook examples of volume confirming price. Take a look at the 3 highest volume days of the last few years (the tallest bars in the volume histogram at the bottom of the chart) See how, without exception, these came just after what turned out to be the extreme limit of the preceding trend and after trendline breaks had triggered buy or sell signals. In other words they provided clear and unmistakable confirmation of the preceding signals.

At first glance, this chart might appear to show 3 "price/volume climaxes" as shown for NZO here but if you look more closely you can easily see that they are quite different in that the volume peaks came a week or more after the price peaks/troughs.

Those who, like TB "have been trying to seek evidence for a long time whether TA should be a valid share investment decision making tool" might like to note the following TA principles that are illustrated by this chart.
See how support was found at $1.09. This is the same level exactly to the cent as was found two years previously. The market has a long memory.
See how marked increases in volume tend to occur at around significant turning points.
See how the On Balance Volume indicator provides excellent and timely confirmation of trendline break buy/sell signals.
See the folly of buying and holding long-term - AIR is right back to where it was many years ago.
See how slightly more active investors (making just a single trade in 3 years) can gain superlative returns from the same stock.
See how, while the trailing stops gave reasonable entry/exit signals, they generally lagged well behind all other indicators (including the many oscillators featured in previous AIR charts on this thread).

Yeah yeah, I know.......... Warren said never touch airline stocks - but look at the opportunity you would have missed by following that dictum!

**Footsie** · 25-07-2008, 01:49 PM

That chart should be in a text book

Perfect TA

**Phaedrus** · 26-07-2008, 01:40 PM

Originally Posted by MoSteph

A better tool might be understanding the oil price/airline relationship.....

Better than understanding the shareprice/volume relationship Mo? I disagree strongly! Take a look at the attached chart and you will see why. It is quite obvious that the relationship between AIR and the price of Oil is too loose for the price of Oil to provide any useful guide as to whether/when to buy/sell AIR.

Originally Posted by MoSteph

Why look at the effect of the accumulation and rally when you can look to the cause?

THE cause?? Mo, there are many reasons why AIR would be accumulated or distributed, or why the shareprice would rise or fall. While we may be aware of a few of them, there are plenty more that are outside our knowledge. The shareprice, however, reflects the sum total of all that is knowable about AIR. That's why buy/sell decisions based on the shareprice are demonstrably far superior to those based on the price of Oil - or any other single factor.

We all accept that the price of Oil has an influence on the profitability of airlines and thus the performance of airline stocks - but it is only one factor of many. In any case, whatever effect the price of Oil has on AIR is already built into the shareprice and there is no need to re-apply it. In fact, this would be counterproductive because you would then be overemphasising the influence of oil prices on AIR.

Mo, I don't believe you are seriously suggesting that "understanding the oil price/airline relationship" is a better tool for trading AIR than understanding the price/volume relationship. I am forced to assume that this must be another of your "wind-ups"! Right?

**Phaedrus** · 05-08-2008, 11:56 AM

Sure Mo - just so long as you view it as a favour, not as a "bite"!

AIR has formed a "Pennant". These are usually a short-term consolidation pattern - in other words, the breakout is most commonly upwards. They have a failure rate of 19%. (Bulkowski considers a failure rate above 20% to be unacceptable.) Keep in mind here that the highest failure rate you can have is 50%. The volume trend during the pennant is typically down as shown here by the magenta line.
These formations can be profitable short-term investments, but you must be nimble and attentive to take full advantage of them.

Technically, you have jumped the gun by selling before any downward breakout, but I am sure you have your reasons.

**Phaedrus** · 11-08-2008, 11:44 AM

I don't put all that much faith in pennants. Its 19% failure rate is too close to Bulkowski's "unacceptable" error rate of 20% for my tastes. For all that, I don't see why the pennant can't simply be redrawn if you wanted to (see below). To my mind, this is equivalent to redrawing support at (say) $1.90 when previous support at $1.92 was broken by a couple of cents - or redrawing a trendline to take in a new peak that had previously penetrated it by just a few cents.

AIR is not in an uptrend until/unless it Closes above $1.28 and it is not in a downtrend until/unless it Closes below $1.23. In the meantime, it is essentially trendless. A significant move in the price of oil would probably shift AIR out of its current congestion zone.

I notice there is a big seller at $1.30.