After Southwest's Seating Change, Will the Stock See Some LUV?
Let's take a look at the charts and see if it's time to book a flight.
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Shares of Southwest Airlines LUV are reacting to the company's earnings and a major strategy change to red-eye flights and assigned seating. Southwest said it's taking "urgent" steps to increase revenue.
Let's take a look at the charts before things get urgent.
In the daily bar chart of LUV, below, I can see that the shares gapped lower in early March and have continued to weaken. LUV trades below the declining 50-day moving average line and below the declining 200-day moving average line.
Trading volume looks to be more active since March and suggests that traders and investors are voting with their feet and selling. The On-Balance-Volume (OBV) shows a soft trend since early March. The Moving Average Convergence Divergence (MACD) oscillator is back below the zero line.
In the weekly Japanese candlestick chart of LUV, below, I can see that the shares have lost altitude over the past three years. Prices trade below the declining 40-week moving average line.
The weekly OBV line declined to a low in November and now shows strength. The MACD oscillator is below the zero line - no help from this indicator.
In this daily Point and Figure chart of LUV, below, I can see weakness since 2021. A downside price target of $6 is being projected but maybe this is too bearish.
In this weekly Point and Figure chart of LUV, below, I can see the same $6 price target as shown on the daily chart above.
Bottom-line strategy: LUV shares might bounce back in the short-run but the weak technical setup could continue. The company needs to make improvements and the charts need to build a base. I am not in a rush to book a flight or buy shares.
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