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JimVanMeerten (58.32)

American Airlines in a tail spin



October 05, 2011 – Comments (2) | RELATED TICKERS: AAMRQ.DL


Warren Buffet and I agree on one thing:  Why would I ever own an airline?  For those of you placing bets to see if and when AMR Inc (AMR) will file bankruptcy you might have noticed the 33% nose dive yesterday and the 21% dead cat bounce today.  Fasten your seat belt and do not attempt to use the lavatory.

All kidding aside the numbers, the markets and most of all the press have not been kind to AMR lately.  Rumors are that every pilot eligible for retirement is planning on turning in their papers hoping to retire and save their vested pensions prior to the company filing bankruptcy.  Lets look at the numbers.  The 5 year weekly trading activity on the graph provided by Barchart shows the stock is 94.69% off it's 5 year high:

Barchart technical indicators:

1 - In some of my recent articles you've heard me say short term negative technical indicators might signal a buying opportunity in a company that has great long term fundamentals -- Well I don't think this is one of those situations.

2 - Barchart 100% overall technical sell signal

3 - Trend Spotter technical sell signal

4 - Below its 20, 50 and 100 day moving averages

5 - Down 32.16% in the last month

6 - Down 71.48% from its one year high

7- Down 94.67$ from its 5 year high

8 - Relative Strength Index 30.75% and falling

9 - Barchart computes a technical support level at 2.06

Recently traded at 2.38 which is below its 50 day moving average of 3.49

Summary:  With it's shaky past record of very unpredictable streams of sales and earnings AMR Inc (AMR) cannot be taken as a serious investment for investors that look at stocks rationally.  There will be money made by day traders placing bets based on the wide volatility of its price swing.  Conservative investors should pass on this one.

Jim Van Meerten is a Marketocracy Master

2 Comments – Post Your Own

#1) On October 05, 2011 at 12:26 PM, Teacherman1 (< 20) wrote:

I remember seeing an interview with the former Chairman a couple of years or so ago.

The thing that stood out in my mind was when he was asked if he owned stock in the company, his replly (paraphrase) was "I would never own stock in an airline.

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#2) On October 05, 2011 at 4:14 PM, miteycasey (29.06) wrote:

I wouldn't worry about pilots retiring. There are plenty to take their place.

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