Discount airliner Southwest Airlines ( LUV) is set to report its latest quarterly numbers on Thursday. LUV has been attracting way too much negative attention in recent weeks from its giant travel disruption in late December.
Let's check out the charts and indicators of LUV to see if they will have more bad news to report.
In the daily bar chart of LUV, below, I see how the downward sloping 200-day moving average line has acted as resistance several times in the past year. The shares made a recent rally to the upside of the 200-day line this month and were rejected.
It looks like the On-Balance-Volume (OBV) line has made a short-term high and the Moving Average Convergence Divergence (MACD) oscillator is narrowing below the zero line towards a new outright sell signal.
In the weekly Japanese candlestick chart of LUV, below, I fail to be inspired by the chart action. The shares are in a longer-term downward trend and trade below the declining 40-week moving average line.
The weekly OBV line has been relatively weak the past two years. The MACD oscillator has been below the zero for more than a year.
In this daily Point and Figure chart of LUV, below, I can see a potential downside price target in the $22 area.
In this weekly Point and Figure chart of LUV, below, I see the same $22 price target as the daily chart above.
Bottom-line strategy: I have no special knowledge of what LUV is going to report to shareholders Thursday but if I was the CFO I would want to get all the bad news out in the open now and not kick it down the road. Just saying. Avoid the long side of LUV.
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Clues were out there, but the news certainly took most by surprise.
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