Hawaiian Holdings, Inc. (NASDAQ: HA) is the parent company of Hawaiian Airlines, Inc., a quaint, but power niche airline company. With great customer services and almost exclusive flights services between the islands of Hawaii, HA is poised for growth. The recent decrease in oil prices will help massively as well. I was in Hawaii back in July 2014 and I heard from many locals how much they enjoyed the experience of flying with HA. As HA looks to expand operations, I'm personally thinking a merger with Southwest Airlines or maybe a partnership might be inevitable which would huge for the kama'aina airline. If they begin to increase flights to the mainland more often, we could see a drastic increase in airline profits along with an increase in stock price. Let's take a peek at the chart performance of HA. I am going to use technical analysis to see where we've been and where we could be going.
Notice the orange box. I call this a distribution phase. This is where a stock trades sideways for an extended period of time, after a strong bullish move. Usually the bullish move leading up to the distribution phase is close to the move out of the distribution phase. Since HA went from $5.50 in April 2013 to $16 in May 2014 that is a $10.50 increase in price. Once HA broke out of the distribution phase in November of 2014, we could project a measured move of about $10.50, which would bring the price action to about $27.00. As I write this on 1/27/15, that's very close to where HA is trading.
Stocks are similar to airplanes, in the fact that they can't go straight up (at least for very long). Momentum, gravity and forces begin to take over. You can see, that is a pretty good description of what HA stock is doing right now. Going straight up. Therefore, in my professional opinion, I would wait for a correction before I thought about buying. Remember, in the stock market, it's a good rule to remember… 'â€buy low, sell high.â€ Don't be the person to buy at the very very top of a stock, hoping it goes higher. What would be more prudent, is to let those who are currently profitable, lock in their profits, causing the stock to sell. Then, as HA likely forms another distribution phase very soon, see if you have the opportunity to buy around $22 or $21, some 15% lower than where it is now. That way, you allow the stock to rest, regain momentum and you make your risk profile much better on the stock. Because even though planes can fly, they all land at some point.
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Thank you so much for reading! I hope you have enjoyed your day and I wish you the best on your future endeavors! Fly safe!
Jerremy Alexander Newsome C.E.O of Real Life Trading LLC