What to Buy (SHORT SELL): LUV
The buy pick is made every evening at Midnight before the next day begins. The pick is a single day trade of a stock or
ETF. The Oxen Group provides analysis, entry/exit points, resistance levels, and a rating for the pick. Picks are only
single day trades. Longer trades are below.
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The Oxen Group is looking for a short sell on
Southwest Airlines Co. (LUV) tomorrow. The market
may move green or red, and it really all comes down to
Bank of America, Citigroup, and GE. Those three
giants release earnings tomorrow. If they are all three
splendid, the market will really take off, even
Southwest Airlines. The only issue for Southwest is
that even if that does occur this stock is going to come
down. In after hours today, Moody's Investor Ratings
commented that they were putting LUV on a possible
credit downgrade due to the weak demand and market
for airfare. The airline industry has been struggling,
but Southwest Airlines always seems to be a step in
front of the competition. This news of a most likeable
downgrade spells bad news for Southwest, especially
because the stock has really no upside right now. What
will happen to Southwest is if the market is looking to
trend down after the earnings report from
thesecompanies, LUV will drop right away and
continue to trend down on a red day. If, however, the
market jumps out of the gate and looks bullish, LUV
will most likely have some type of small gains into the
day, but it will not be able to sustain those gains and
move backwards. Further, one has to wonder even if
the earnings are positive, how much more this market
has to go with four straight days in the green and a lot
of quickly overvalued stocks. Additionally, if CIT does
go bankrupt it could add more fuel to a downward
market. LUV technically is oversold, outside of its
upper bollinger band, and way overbought. So, its
technicals all point towards downward movement.
Entry: Recommend buying in 15-30 minutes into
session if earnings are good, right away if bad.
Exit: We recommend exiting after a 2-4% increase.
Stop Loss: We recommend a 3% stop loss on all buy in
prices
Upper Resistance: 6.60 (lower)
Oxen Rating*: 5
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