Technicals vs Fundamentals for AirlinesFirst off, we have gotten through the initial sell off of airline securities. Covid obviously being the first one to cause the markets to dive , not just for travel but several areas of the market. As we get into 2021 we see a revival in people beginning to go back out and travel as restrictions lighten up.
According to RSI, UAL had almost become overbought due to this climb in travel . Obviously for those who bought the dip figured this would be a good time to sell and make a quick buck off of the roughly 200% or so increase in the value of the stock. Based on the technical side , entry and exit strategy was mainly based around what they relative strength index was showing.
Looking at the fundamental side , we need to keep in mind one very large factor . And of course always consider the bigger picture given what has happened in the past two years. The government taking trillions upon trillions of dollars from FED is going to have it's repercussions. On top of the major indices running for a decade long at a substantial amount of growth with no any real data to back it up , the diluting of the dollar was done just from making to much of something . As reports of inflation cuts back. we are going to be seeing the average consumer cutback on certain items . Travelling is definitely going to be one of the first things to go on that list of cutbacks , not to mention we see a sell off with NASDAQ:UAL NASDAQ:UAL once gas prices nationwide begin to skyrocket due to the the impact on raw materials from The Russian Ukraine War .
Like most securities, the future here is unpredictable . UAL and other airline stocks are currently sitting at what I would consider Lower highs and lows. the put it blatantly , my new marked off area of support and resistance only encircles an underbought zone and the technicals infer that it would be a good time to buy. On the other side , the fundamentals may not quite agree , demand for using airline companies just doesn't have the brightest future based on what we are seeing in the current global market (oil+gas) and the national economy(inflation).