Oversold Airline Ready For A Quick Rebound

By: Michael Kahn of Street Authority

Trading countertrend moves can be profitable but risky, so it pays to line up as many factors as possible in our favor before putting money to work.

When a stock sports a price-to-earnings (P/E) ratio that even a technical analyst such as me thinks is low, it's worth a look. When it is oversold at support, I'll get interested. And when the price of its main input commodity starts to fall, I'll consider a quick snapback trade.

This is the case with American Airlines (Nasdaq:AAL).

I will admit that as a chartist, looking at fundamentals gives me the willies, but AAL has a trailing P/E ratio of just 3.1. That's not only insanely low compared to the SP 500, which has a P/E ratio of 19.1, but it's less than half of the industry average of 6.3. Even based on next year's earnings, AAL trades at just 5.7 times estimates.

The stock has fallen more than 20% in the past month and a half, but the recent drop in oil prices following a multimonth rally could result in a short-term pop in AAL.

Oil prices cratered 2.5% Tuesday on expectations that U.S. crude inventories hit a new record high. This was the third straight session of losses, and oil prices are now more than 5% off their 2016 highs made last week. But AAL's action on Tuesday leads me to believe this could be a great spot to enter a quick bullish trade. Continue reading "Oversold Airline Ready For A Quick Rebound"

Article source: http://www.streetauthority.com/node/30678423

This stock may be getting ready to fly.

This stock may be getting ready to fly.

I was looking through our alerts recently and this stock just jumped out at me. I want to share my thoughts about what I expect will happen to this market in this short video. We've discussed this pattern before on several other videos and all have worked out very successfully.

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Take a quick look at this short video and see what you think. I think you'll be impressed at the pattern and the possibilities that this market has on the upside.

The video is available right now and there is no charge or registration.

Enjoy,

Adam Hewison
President, INO.comâ„¢

Co-creator, MarketClub.comâ„¢