Airline Stock Prices Have Excessive Altitude
The airlines have been going absolutely ape lately. American Airlines doubled in price in the span of three weeks (incredible, yes?) Take a look at these three examples of larger passenger airlines. You can see the similarities.
American Airlines
Alaska Airlines
United Airlines
In the above graphs, there is still room between present price levels and the horizontal marking the major price gap. However, I’d like to note that the Transportation sector in general (below, the $TRAN) is awfully close to a mountain range of overhead supply. Those who gambled on the airlines in recent weeks have made out like bandits, but I think the easy money has been made.
Dow Transports
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Will the re-opening of the economy not benefit the airline industry?
As people start to travel, of course it will. But it will be a while before airlines are back up to pre-pandemic levels. It seems to me that these stock rises are completely unjustified.