Airlines have issued a notice on demand.
JetBlue, Southwest, United and American Airlines cut their outlook on Thursday in response to rising cases of delta variants that have decreased demand. This is the latest hurdle in the rugged recovery of an industry hard hit by the pandemic.
But his actions shook that warning to rise. The JETS ETF rose nearly 2% on Thursday, adding a 44% rise from last September’s lows.
Matt Maley, chief market strategist at Miller Tabak, said the passage of the day would likely be a “buy the news” reaction. He warns that there is still a lot of uncertainty around the next move of these actions.
“The lower resistance line I think is lower,” Maley said Thursday on CNBC’s “Trading Nation”. “Look at stocks like JetBlue, stocks have fallen 30%, so you think, ‘Oh God, it must be a great buying opportunity,’ but it’s still more than 100% higher than the 2020 lows.”
Maley doesn’t see airlines ’shares return to last year’s lows, but warns that a new test of their summer troughs would indicate further downside. He said JetBlue and several other airlines, for example, have formed a double bottom, and any interruption below that would wave a technical red flag.
“They have a lot more difficult moms and I think they will present an incredibly big buying opportunity at some point, maybe later this year or early next year, but I think it will reach lower levels,” he said.
In the same interview, Tocqueville Asset Management portfolio manager John Petrides said visibility was still too clouded for it to jump on airlines.
“Investing in airlines is like investing in a box of chocolates; in the short term, you really never know what you’ll get,” Petrides said. “If you play in that space, you really have to have a strong stomach because the volatility is always high.”
Although the pandemic has been the biggest headwind in the group, Petrides said he was not the only one.
“In a world of potentially rising interest rates with higher gasoline prices in a capital-intensive business, how will these industries work if Covid spreads?” Petrides asked. “I’m more inclined to stay out of it.”
Exemption from liability