We're definitely on the same frequency. I once heard a good saying, "The stock market is simply impatient investors handing over their money to patient ones." Boy is that true! I'm convinced that had the US S&P / DOW rallied overnight, QAN would easily be over $4 today in "candyland." This, bearing in mind would push it to unrealistic P/E ratios as the price rises with critically low earnings. As I type, US futures are down again as the negative figures throw a bucket of ice-cold water over the heads of those high on FED cocaine-cash, which mind you, is going to precipitate the next disaster - a debt crisis! We can expect today and next Monday to wipe away a lot of last week's gains, then the ASX 200 will tread water again. As I said in my last post, Trump is talking-up sanctions and tariffs on China going medium-term, which caused the last V-shaped drop in 2018, saved by the mighty FED. But this is very different as the FED is fighting a war on many fronts: rising corporate debt, a soon-to-crater bond market, rising unemployment, GDP contraction, lower consumer confidence, property crisis, oil prices.....and whatever else is lurking. But investors are stuck in this dangerous mindset of not wishing to miss out on the recovery.
Have you ever tried to wake up earlier to beat the traffic? Then you realise that a lot of other drivers have thought the same, so the traffic jam you tried to avoid happens 1 hour earlier than you'd anticipated. That's where stock prices have headed, "I'd better get in early before I miss it at $4, $5, $6....." But that rationale places emotion before fundamentals. There's a lot more information (negative more than positive) coming in the months ahead. Over the month of April, QAN has moved above and below both its simple and exponential moving averages indicating there's little evidence of bullish strength. As each month or restrictions passes, the outlook gets more bleak. Wait until Q2 earnings roll in! I, like you, are positive in terms of the QAN business model and believe it will come out of this OK. I've been trading this stock for 20 years and have done very well as I am very familiar with its underlying business trends and activity. However, we can expect other carriers globally to begin to really struggle and some fold. A fall below $2 is on the cards and I don't mind taking a position around $2 - $2.50 range. Other than that, buying at these levels prior to a viable vaccine in the works and a return to QAN / Jetstar's international division, is just plain (as Greenspan once said), "irrational exuberance."
QAN Price at posting:
$3.66 Sentiment: Hold Disclosure: Not Held
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