I see low oil prices as sprinkling fish food into a stream..The big fish get the most benefit, the remainder floats around and attracts more fish that weren't there to begin with...I think AIR is not classed as a big fish.
Airlines V Oil correlation is not good...Recessions kills both Cyclical Airlines and Oil prices which upsets any (false) "logical" conclusions that correlation exists ....If we think this time the Oil price is not a reaction to negative Global economic growth...then perhaps there "could" be a hint of correlation.
The chart below illustrates AIR's relationship with Oil..Its a pity there is no very long term freely available chart data to validate accurately the relationship.
...also...
AIR is testing the psychological $3.00 Resistance
The $3.00 resistance theory (chart) v Practical (Depth)...the depth shows the charted resistance line is quite strong..
The cyclical resistance is not far away...
If AIR is not a true cyclical* (Averaging positive Organic growth within its market environment over decades) then the cyclic resistance could be under threat
*...True Cyclical companies grow strongly during good economic times and shrink strongly during bad economic times...net result over time = no
overall growth (flat line, no trend)
Is this $3 some magical number?
Once released from the snare the sky's the limit?
No...$3.11 is the primary resistance then its blue skies..
The depth $3.00 resistance is now gone...
This theoretically means lower risk to buy...as $3.00 now becomes a support..so the risk v reward equation becomes more favourable..
However the reward side of the equation is still low as the cyclical (primary) resistance is still there..
Its all to do with safer investing...You lose the opportunity for big gains at high risk and replace it with smaller gains with lower risk
Disc: dipped my toes in..bought a small parcel...viewed as possible short term (hold until sell signals)
The s/p doesn't signal strong confidence atp and other brokers have t/p's from $2.80 to $3.03. Anyone got other broker reports?Time will tell re if are they "usually" right or" seldom".Craigs have re 7 Airline stocks ahead of AIR in target prices atm.With oil prices staying low , it certainly helps. Not a high conviction stock for me atp but holding with a good margin of safety atm , price purchasewise.Then theres things like terrorism alerts to worry about, unfortunately.
Have laboured through the pricing then 18/11/15 and the share pricing now of re 22 Airlines
AIR has performed in 6th place with re +5% QAN re +5.4%
12 of the Airlines have negative returns
AIR FRANCE the highest return re +21% LUFTHANSA
next with re +12%
Bottom is AIR CHINA,CHINA EAST<CHINA SOUTH -23 to -25%
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