Delta Sounds The Alarm
Two months ago I wrote a post calling the tops in the Transports,
I’m Calling The Top In The Transports
The charts are telling me the top is in on the Transports. The iShares Dow Jones Transportation, IYT, is exchange-traded fund that is highly correlated to the Dow Jones Transportation Average. The index includes companies within the trains, planes and auto…I mean trucking sector
Thanks to stockcharts.com, according to the Airline Index, $XAL, momentum is decelerating and the chart is showing negative divergence using RSI and the MACD.
Today, Delta became the first airline to sound the alarm. Shares of Delta Air Lines finished 9% lower yesterday after they trimmed their revenue forecast for the fourth quarter. They also cut their growth estimate for revenue per available seat mile by half a percentage point to 3%.
Half a percentage point cut may not be much, but it’s signaling to investors that people are travelling a little less…just maybe because the equity markets are starting to decline…just maybe because people now have less money for discretionary spending.
Although Delta fell 9% yesterday, the chart just further downside. Price is current at $45, but the chart suggests another 37% decline to the month supply at $28 is in the cards for Delta.
Delta is the #2 carrier by traffic and a great gauge on the airline industry. Thus, I’m expecting more downward guidance from the other airlines in the coming weeks.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
It is hard to be optimistic for 2019 when looking at monthly charts on most everything right now.
Very true, I feel sorry for the avg. person who doesn't know how the stock market really works.
The airlines have always been the first to engage in cannibilism within their industry. I am actually surprised it has taken so long to be honest. Given the amount of new planes coming soon (looking at Boeing’s earnings), I would be surprised to start see new price wars soon as demand cools off after the holiday.
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It's a tough business and economies of scale is the name of the game. As the economy tightens, the fighting will begin.