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A WestJet plan comes in for landing at Vancouver international airport July 26, 2010 during a strike by unionized workers who refuel airplanes. (The Globe and Mail/JOHN LEHMANN/The Globe and Mail/JOHN LEHMANN)
A WestJet plan comes in for landing at Vancouver international airport July 26, 2010 during a strike by unionized workers who refuel airplanes. (The Globe and Mail/JOHN LEHMANN/The Globe and Mail/JOHN LEHMANN)

Schizas' Mailbag

WestJet Airlines still in the grips of a downtrend Add to ...

Hi Lou,

I too enjoy your insights and suggestions.

Have the better days of Westjet Airlines passed by, or will these new lows be with us for some time?

Mark



Hi Mark,

Thanks for your kind words and the assignment. WestJet Airlines Ltd. has seen better days in terms of its stock price. But at these prices it is attracting attention from the bottom fishers. In a Nov. 28, 2011 Globe and Mail article, Darcy Keith interviewed CIBC World Markets analyst Kevin Chiang who said that at current levels WJA represented a buying opportunity.

A review of the charts will add further depth to the analysis.

The three-year chart tells the tale of a stock that is in the grips of an aggressive sell off that started in early July of 2011. By early August the shares failed to hold onto support at $14.00 and a death cross surfaced by the end of the month. The ledge of support at $13.50 was breached by the end of September.

In summary, a chart that has an established downtrend, a death cross and repeated failures to hold support. No oil painting this.

The six-month chart indicates that the MACD has been generating buy and buy signals through the period. Currently the MACD seems to be suggesting the bounce off the rock bottom near $10.00 might have more in it. In addition, $10.00 has provided support going back to 2003 which tells us that investors who follow WJA see opportunities at these prices.

I think that you have a trade forming up but you will have to be careful of the resistance that is evident along the 50-day moving average. Overall the charts are not screaming out that the downtrend has been broken and that puts a caution flag on the track for me.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

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