What airline stock do you love the most? Try Southwest (LUV). (March 17, 2015)
I want to look at LUV, at Southwest Airlines ( NYSE:LUV ), and this is why. Here’s the real gist of things: oil’s down, it’s continuing to move down. You can’t say 100 percent that that’s why airline stocks have been up; I’ve been flying a bit recently, all the seats are full, so I think that there’s probably a little bit more to this airline story than cheap AvGas.
For me though, all I care about is the trend, and I mean that sincerely. There can be the most compelling reason to sell and short airlines imaginable, but as long as the stock is moving higher, I’m not that guy to short. If you’re looking for a guy to find the top, I’m not your guy. If you’re looking for a guy to find the bottom, I could be your guy, because bottoms are actually much easier to identify than tops, because all you’ve got to do is just follow the puke.
When everybody’s barfed them up you can see because it’s like these are going about straight down. Then when you get your flip, Boom! You’re in and you get that oversold bounce. I’m totally adlibbing here, I hadn’t thought about this, this would be one, ( NASDAQ:SSYS ), Boom! A big massive sell off, dragonfly doji at the end of the first day; I could pick that one; in fact I think I actually did on Option Market Mentor.
This is easy; when you’re looking at this though, how do you know whether this is a top or whether it is consolidation? If you do know you’re a liar, nobody does. What you do know is this; the 50-day moving average is trending higher, flattening out just a bit, but you’ve got to expect that it’s going to flatten out, after all the stock’s been trading sideways. But all the airline stocks are doing well. Look at Hawaiian Air ( NASDAQ:HA ), even that stock is starting to perk up and that’s been on death row forever.
So you look at Southwest ( NYSE:LUV ), a nice breakout from a volatility squeeze, expanding volume, what’s not to like on this? So Southwest Airlines ( NYSE:LUV ), in my view, continues to climb, this is where you want to be. For me, I’m not exactly going out on a limb to say the stocks likely to hit 50.00; that’s another 10 percent up. But the big deal is this, what is it about this chart that you don’t like, other than the fact that you didn’t get in, neither did I, you didn’t get in here at 15.00? It would have been nice to have gotten in here and still be holding the stock. By the way if you did that, you’re probably a liar too.
The bottom line is this; you stick with these stocks as long as they’re working. Southwest ( NYSE:LUV ) continues to work; it’s just starting to move out again so I think you’ve got a great opportunity here to make a higher probability trade on a stock that’s:
1. in an uptrend
2. has had a period of consolidation for a couple of months
3. is just starting to confirm that buyers are in control of the stock