| After seeing some strength in the past few sessions, airline stocks have come under considerable selling pressure in morning trading on Tuesday, contributing to the substantial downturn that has been shown by the broader markets.
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| | | | | The weakness in the airline sector is reflected by the 3.5 percent loss currently being shown by the NYSE Arca Airline Index, which is moving back to the downside after closing higher in three our of the four previous sessions. UAL Corp. (UAUA) is turning in one of the sector's worst performances, with the parent of United Airlines currently down 8.6 percent. American Airlines parent AMR Corp. (AMR) has also shown a notable decline, falling 6.1 percent. The loss by AMR comes after the company revealed that its plans to sell more than a half-billion dollars in debt to help pay for 16 new Boeing (BA) planes and bolster its balance sheet. AMR will sell $520.1 million worth of 10-year notes to help finance the purchase of 16 new Boeing 737-823 aircraft scheduled for delivery between July 2009 and October 2010 as well as to refinance some of its older Boeing 777 aircraft. The weakness among airline stocks also comes after FTN Equity Capital Markets lowered its full-year estimates for the industry, citing bigger than previously expected drops in unit revenues as well as higher jet fuel costs. However, FTN analyst Michael Derchin noted, "While the network airlines are forecast to report large losses in 2009, they have the financial and operating leverage to produce substantial earnings surprises when the economy recovers in 2010."
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