Is there Alpha in Southwest Airlines? (LUV Stock) [Video]

Giles Coghlan LLB, Lth, MA Financial Source

Markets are increasingly bullish on airlines with a string of positive headlines coming out this week. The CEO of American Airlines is reported to have told a JPMorgan conference that he has personally been buying other airline stock. United Airlines reports that following the Omicron Covid peak demand for travel exceeds prior expectations. Also, Delta Airlines, Southwest Airlines, American Airlines, United Airlines and Jet Blue have all upgraded current-quarter revenue forecasts with them all expecting a recovery in air travel demand.

So, is this time to start looking at buying airline stock? Southwest Airlines tends to give a stronger second half of the year, so could this be the right time to buy the stock ahead of a potentially stronger second half of the year?

Over the last 15 years, Southwest Airlines has risen 11 times between June 25 and December 02. The percentage of winning trades has been 73.33% and the average gain has been 11.32%.

Major Trade Risks:

Risk-off markets would typically result in stock weakness.
An aggressive rate hiking cycle by the Fed would also weigh on global stock prices.

Learn more about HYCM

Author

Giles Coghlan LLB, Lth, MA

Financial Source

Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD holds steady near 1.1650 ahead of US data

EUR/USD stabilizes near 1.1650 on Friday after facing a rejection once again near seven-week highs. The pair, however, continues to draw support from persistent US Dollar weakness, despite a cautious market mood. Traders now await the US September PCE inflation and UoM Consumer Sentiment data.

GBP/USD clings to gains in 1.3350 region, eyes on US data

GBP/USD sticks to a positive bias near 1.3350 in the second half of the day on Friday. Traders prefer to wait on the sidelines ahead of the key US inflation and sentiment data due later in the day. In the meantime, broad-based US Dollar weakness helps the pair stay afloat.

Gold remains below $4,250 as traders await key US data

Gold gains some positive traction on Friday and trades in the upper half of its weekly range. Dovish Fed expectations continue to undermine the USD and lend support to the commodity. Bulls, however, might opt to wait for the US PCE Price Index before placing aggressive bets.