Friday, 27 September 2013

UAL - dive bombing into the weekend

United Continental (UAL) saw severe falls, after warning of lower than originally expected international revenues, settling -9.3% @ $30.91. The 200 day MA - along with recent price cluster-action, around the $30 threshold will likely be tested early next week.

UAL, daily

UAL ,monthly


UAL has always been a bit of a volatile stock. It is highly susceptible to not only the moves in the main equity market, but especially in regards to WTIC Oil prices, and also currency fluctuations.

Today's fall of 9% is certainly a very major fall, but then...we have had plenty of similar sized falls, as recently as mid August.

Airlines always struggling to turn a profit

It has to be said, underlying balance sheet/profit margins look pretty lousy...

see key stats @ yahoo! finance  

It will indeed be VERY important to UAL - along with all airlines, that WTIC Oil prices remain no higher than $110 in the months ahead.

Another few percent lower (at least)

In terms of price action, UAL looks set to fall further, at least to the $30 threshold, that is a further 3% lower, which seems viable as early as the Monday open.

If UAL can hold $30...and if the main market can start to rally on a 'no shutdown' congressional vote, then UAL should be able to resume the ongoing multi-month rally. Just consider that UAL started the year at $23. Despite periodic severe drops, UAL is still a net 20% higher this year.

Looking ahead

In terms of mid-term upside, a break above the July high..into the $37s, should open up a free ride to the Oct'2007 high of the $48s - see monthly chart, where there was a clear double top of Jan' and Oct' 2007.