Thursday, March 19, 2015

[LUV] update

In the backlink I modeled that LUV would likely do a bit more northing before this thing would be done.

Here is the model from that post.

Well, we are at the model's first potential reversal point which is where the shares would form a DDT which I like to call owl ears.  There is no need to speculate about when the breakdown confirmation has occurred, it will be the breach of that green up-sloping line to the downside. 

LUV has benefited from industrial activity associated with the Bernanke put.  It has also benefited from plummeting commodity prices as everyone abandoned commodities in order to go play stocks which were enjoying seemingly endless gains.  I think money is going to move back into commodities and the economy is going to fall into a large recession or worse and that will spank the airlines, all of them, hard.  Business air travel is always one of the first things to be cut off when sales collapse.

This does not have to reverse right here and now.  It could potentially go all the way to $50.  But the ice is beginning to get thin here for LUV gamblers according to my wave model.

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