Shares of the airlines traded mostly down, as travel demand has been affected by the continued rise in new COVID-19 cases caused by the spread of the highly infectious delta variant.
An airline industry tracker, which has been on a downward trend for the past five months, has produced a bearish “death cross” chart pattern, which could be a warning of weakness.
The US exchange-traded JETS fund, Jets,
fell to 2.1% intraday, before halting losses down 0.7% in afternoon trading.
Among the most active components, the shares of American Airlines Group Inc. AAL,
they changed little, while Delta Air Lines Inc. DAL,
fell 0.2%, United Airlines Holdings Inc. UAL,
yielded 0.6%, JetBlue Airways Corp. JBLU,
fell 1.1%, Southwest Airlines Co. LUV,
fell 0.6% and Spirit Airlines Inc. SAVE,
Data from the Transportation Security Administration showed that the daily average of people going through their security checks last week (through Sunday) fell to 1.94 million, from 1.99 million the previous week .
It was the second week in a row, the average was below 2 million after four consecutive weeks above 2 million, and it was the lowest level since the week ending June 20, according to an analysis by MarketWatch of TSA data.
The slowdown comes when Southwest revealed last week that it experienced a slowdown in travel reservations and cancellations in August, which it believes is due to the recent increase in COVID-19 cases associated with the delta variant. The airline said its third-quarter revenue forecasts have worsened by three to four percentage points as a result, and that it will “hinder” quarterly profitability.
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Andrew Didora, an analyst at B. of A. Securities, said Monday in a research note that the recovery of business travel, which has been much weaker than the recovery of leisure travel, “can be modestly pushed by having into account the current environment “.
Didora noted that many airlines have estimated in recent weeks that demand for companies should improve to drop from 40% to 50% this fall. Meanwhile, the latest data showed that domestic tickets sold through major corporate channels fell 55.7%, compared to 53.9% last week, he said.
And that’s not all: “Visits to the U.S. airlines’ website slowed to a + 2% rise during the week that ended 9/11 levels against 2019, compared to + 6% from last week and have been declining since early July, “Didora wrote in a note to customers.
The Jets ETF has dropped 13.8% over the past three months, while the DJT Dow Jones Transportation Average,
of which 6 of its 20 components are airlines, it has lost 6.2% and the DJIA Dow Jones Industrial Average,
has gained 3.3%.
The “Death Cross” pattern appears on the Jets ETF chart
A chart of the Jets ETF (JETS), which has been steadily declining over the past few months, has produced a technical pattern that sounds ominous, known as the “death cross,” that warns of possible losses.
JETS began firing in late 2020 and early 2021, as the administration of COVID-19 vaccines aroused investor interest in reopening trades, especially in the sectors most affected by the pandemic in early 2020, such as airlines.
That reopening concentration helped produce a “golden cross” in mid-November, which is when the 50-day moving average (DMA) crosses above the 200-DMA. Many chart watchers believe that a “golden cross” marks the point that a short-term rally is graduating to a longer-term uptrend.
On March 15, the ETF reached a high of $ 28.71 at 13 months, which at the time was a 28.3% year-over-year increase, compared to a 5.7% gain in the index. S&P 500 SPX,
at the same time.
Recently, JETS was trading at approximately 21% below its March high, as interest in the reopening of stocks has faded.
This decline has now produced a “cross of death,” which is the opposite of a “golden cross.” The 50-DMA, which many use as a short-term trend tracker, fell to $ 24.04 on Monday from $ 24.12 on Friday, according to FactSet, while the 200-DMA, which is seen as a line dividing between uptrends and long-term downtrends, it rose to $ 24.11 from $ 24.08.
Keep in mind that moving average crosses are not necessarily good market timing tools, as they are well telegraphed, but they can help investors recognize that the recent trend has lasted long enough and / or spread long enough to, at least. , consider your position long-term prospects.
The last “cross of death” appeared on March 5, 2020, about a week before COVID-19 was declared a pandemic. JETS fell another 44.6% before dropping to $ 12.00 on May 15, which was the lowest close since it began trading in April 2015.
JETS ‘technical problems began about a month before the “cross of death” appeared.
The ETF closed below the 200-DMA on July 13, for the first time since November 6, 2020, to warn of a transition to a longer-term downtrend. Shares have not been able to close above the 200-DMA since then.
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