For an "Executive Decision" segment on Mad Money Wednesday evening, Jim Cramer checked in Steven Udvar-Hazy, executive chairman of Air Lease Corp. (AL) , the airplane leasing company with its finger on the pulse of the airline industry.
As for the health of the airline industry, Udvar-Hazy noted that nearly 4.5 billion passengers flew on major airlines in 2019. That's why he expects the industry to recover quickly, as airline travel is vital to the global economy.
Air Lease currently has 382 aircraft in their fleet with an additional 399 on order for the airlines.
Let's file a flight plan and check out the charts.
In the daily bar chart of AL, below, we can see that prices started their descent a little earlier than the broader market back in January. AL declined sharply and reached a downside price target from a double-top pattern on the weekly bar chart (also below). Prices made a quick 50% retracement of the decline in late March and then "chopped around" before starting a new advance in May. AL has made a new high for the move up and is now above the rising 50-day moving average line and below the declining 200-day moving average line.
The daily On-Balance-Volume (OBV) line has been extremely strong and has made a new high for the move up. The strong OBV line tells me that buyers of AL have been very aggressive the past two months.
The Moving Average Convergence Divergence (MACD) oscillator recently crossed above the zero line for a buy signal.
In the weekly bar chart of AL, below, we went back five years to show the double-top pattern at $50 with the low at $30 for a height of $20. Subtracting the $20 from the $30 low gives you a $10 price target, which was reached in March. Prices have rebounded and the indicators are improving. AL is still below the declining 40-week moving average line but that will take some time to overcome.
The weekly OBV line has bottomed and the MACD oscillator has crossed to a cover shorts buy signal.
In this Point and Figure chart of AL, below, we can see the recent upside breakout and a potential price target of $54.
Bottom-line strategy: Traders could go long AL on a one or two-day dip. Risk a close below $25. Our price targets are $40 and then $54.