DONT GET TOO EXCITED BY ONE DAY RALLY IN JET AIRWAYS

Jet Airways rallied 9% today to close at 232. Does that mean stock is ready to rally? Well – just look at the chart and you will understand why the rally means nothing

Jet Airways is a sinking stock

As you can see in the chart above: Jet Airways stock has declined from 650 in May 2013 to now at 232 by Feb 2014. It’s too dramatic a decline and chart has been so badly damaged in this fall that any rally will invite sellers sooner than later. Technical turnarounds do not happen by one day bounce. Sharp rally can sometimes break the downside momentum but that is no guarantee of up move.

Why stock was up 10% today?

Competition Commission of India’s (CCI) approval for purchase of 50.1 percent stake in Jet Privilege Private Ltd (JPPL), a customer loyalty programme unit of Jet Airways. But this news has been there for months. The news may offer some floor for time being but it does not change the operating environment of the company. Also, remember – few days back Federal Aviation Administration (FAA) has warned Indian airlines on safety issues and has put a ban on new flights to US. Things are tough and today’s rally can only be perceived as a relief and not a game changing event neither fundamentally nor technically.

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