Airlines Are Not Safe at Any Price from thestreet.com
We all watched the big $5 move down in crude oil today. I know what you are thinking: "Airlines, they have to bounce right?" and I have to admit the thought crossed my mind as well.
I have been looking for a sell-off in oil for about $15 to $20 now. Five from the high is an interesting move, but to be accurate, I would call it amusing. That's because there are a few things that have to happen before the inevitable real correction in oil takes place.
I have seen these traps before. They are very similar. It starts with a move up on bullish news, and the early morning sees all bids. As the trading day progresses, sellers test the water. Yesterday, for the first time in a while, the bulls seemed to tire after three or four attempts to prop up the growing heaviness in oil. After all, the other news of the day wasn't bullish at all.
In fact, some of it was rather bearish. For the first time in six years (according to AAA), we American gasoline junkies curtailed our driving on the vehicular-ly beloved Memorial Day weekend. The number of miles driven in March retreated for the first time (year-over-year) in 28 years or so. The interesting thing is that the March numbers showed a not-so-innocuous 4.3% drop in miles driven to and from Costco(COST - Cramer's Take - Stockpickr) (one way to counter a ridiculously elevated price at the pump).
Back to yesterday, I was thinking of whether or not the airlines were in a position to bounce. After all, the group has been beaten senseless for its inability to manage one of the most basic business tenets going: manage your costs and the rest will follow. .......
I have been looking for a sell-off in oil for about $15 to $20 now. Five from the high is an interesting move, but to be accurate, I would call it amusing. That's because there are a few things that have to happen before the inevitable real correction in oil takes place.
I have seen these traps before. They are very similar. It starts with a move up on bullish news, and the early morning sees all bids. As the trading day progresses, sellers test the water. Yesterday, for the first time in a while, the bulls seemed to tire after three or four attempts to prop up the growing heaviness in oil. After all, the other news of the day wasn't bullish at all.
In fact, some of it was rather bearish. For the first time in six years (according to AAA), we American gasoline junkies curtailed our driving on the vehicular-ly beloved Memorial Day weekend. The number of miles driven in March retreated for the first time (year-over-year) in 28 years or so. The interesting thing is that the March numbers showed a not-so-innocuous 4.3% drop in miles driven to and from Costco(COST - Cramer's Take - Stockpickr) (one way to counter a ridiculously elevated price at the pump).
Back to yesterday, I was thinking of whether or not the airlines were in a position to bounce. After all, the group has been beaten senseless for its inability to manage one of the most basic business tenets going: manage your costs and the rest will follow. .......
