Avoid the Long Side of JetBlue After $400 Million Offering

JetBlue Airways JBLU announced an offer of $400 million of convertible senior notes Monday and the stock price gapped lower. Let's make sure our seatbelts are low and tight and check out the charts and indicators for an update.

In this daily bar chart of JBLU below, I can see that prices made a new low for its recent move to the downside. Prices are close to a retest of the late May low. Prices trade below the 50-day and 200-day moving average lines. Both moving averages are cresting. The On-Balance-Volume (OBV) line shows a positive trend for much of the last year but it has leveled off in July and August. The Moving Average Convergence Divergence (MACD) oscillator has been weakening since February and is now below the zero line in sell territory.

In this weekly Japanese candlestick chart of JBLU below, I can see that stock prices have been losing altitude for the past three years. The 40-week moving average line has had a negative slope for much of the past three years. The weekly OBV line made a long decline and then bounced but has been weakening again since March. The MACD oscillator is either hugging the zero line or slightly below it.

In this daily Point and Figure chart of JBLU below, I can see a potential downside price target just below $4.

In this weekly Point and Figure chart of JBLU below, I can see a downside price target in the $4.20 area.

Bottom line strategy: Among the cities in which the blues initially took root were Atlanta, Memphis and St. Louis. It was Chicago, however, that played the greatest role in the development of urban blues. Maybe JBLU should move its headquarters to Chicago from Long Island City? Still, I doubt even this would help the stock price. 

Avoid the long side of JBLU.

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