Jet Airways reaching high confidence buy zones (TA & FA)

Technicals: Price is close to the trendline that has held since 2009. So far from a technical standpoint, we have no reason to assume that history will not repeat itself. Previous week's candle shows incredible volume (week with the fourth highest volume since inception). Nonetheless, the price failed to move lower. Large limit buy orders seem to be accumulating in this zone, mostly institutions are stepping back in.
On the Daily chart, we also see a RSI bullish divergence (i.e. Bears are losing strength).
If this trendline were to break then the next logical support is at low 200s.
If one were to enter at the trendline without confirmation then it would be a gamble that could cost a loss of 50%.

Fundamentals: A few days ago, Media reported "Can't fly beyond 60 days, Jet tells Staff". Following this Jet Airways made a statement refuting such accusations (called it incorrect and malicious). *In my unprofessional opinion, might just have been a hoax by large operators to fill up their limit buy orders, pure speculation*. The company also denies any talks of a stake sale.

This year marks the highest losses for Jet Airways. Their operating profits are down to 3% whereas last two years they reported close to 13%. This could be due to the rise in Crude Oil prices. The inverse relationship of crude oils prices and aviation sector is very evident. If Oil were to push to $100 which looks unlikely at the moment then Jet Airways would be really in trouble. Govt subsidies would need to bail aviation sector out. Whereas on the flip side if Oil sees a correction to $50 then we have a green flag to hold for the next 2-3 years.

Another major spending that Jet Airways needs to deal with is, Maintenance costs. But in their defence, Jet owns some of the oldest flights in India so it would be unfair to compare maintenance costs with new airlines like IndiGo.

I believe in a few days, Jet will be publishing a report. After a complete analysis of the report, we might have more to go on.

Conclusion: I will be buying in only if I see a bounce and a second retest of the trendline. Sometimes in life, contrarian calls pay off.


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