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LOOK REPORT #11: Delta Airlines from 1988 to Present Background: Quick Look Reports will look at a possible dominant trend in an Index, Equity or Commodity and some possible long-term (yearly) trends which could emerge from the dominant cycle(s) (the dataset for #11 involved the daily closing prices). Quick Look Report # 11 looks at what happened to the daily closing prices of Delta Airlines from 1988. Since Delta is bankrupt we are looking at the forensics to give a clue to the overall trading patterns. The secondary seven daily cycles in Delta Airline were : 10, 17, 26, 41, 56, 70 and 85 days. The seven primary daily cycles were 108, 148, 250, 345, 502, 724 and 1241 days. There is also a longwave cycle around/beyond 1800+ days but this dataset was not long enough to sufficiently resolve its phase. These cycles represent an approximate (within 3%) fit to the amplitude/phasing of the long term daily closing prices of Delta Airlines from 1988 thru August 2005. It is believed the following NASDAQ predictions could be in the context of a very long term secular bear trend (36-38 year cycle now heading down) which should be clearly evident by the latter part of 2008 or early 2009. However, some nice secular bear rallies can occur for durations on the order of 18-24 months could be in the offing over the next ten years. There are also some very interesting observations about the long term NASDAQ cycle behavior which has not been seen before in the NASDAQ. Chart 1 shows the daily cycles in Delta Airlines for the period from 1988 thru 1999 versus all the cycles in the stock. The daily closing prices of Delta Airlines (DAL) shows a significant change (as did many stocks) from March 1994 thru 1999. Chart 2 shows the daily cycles in Delta Airlines from 2000 thru Sept 2005. The stock began a major downtrend after July 2000 with one final rally into a top in May 2001. Chart 3 shows the comparison for all the cycles in the daily closings for 2000-2005 versus the primary seven cycles in Delta Airlines. This chart shows the significant major moves in the Delta Airlines waveform were represented by its seven largest cycles until now. The three most significant cycles were the 184, 250 and 345-day. Chart 4 depicts the seven primary cycles in Delta Airlines versus the 184-day cycle. It shows that this cycle became a dominant component in the trading patterns of Delta Airlines stock after 1990. In fact, it was the key cycle which determined both of Delta Airlines tops in 2000 and 2001. Chart 5 compares the 184-day cycle in Delta over the years with the 184-day cycle in the NYSE. In the 1990’s, Delta Airlines lagged the NYSE waveform but later (by 1999) was in phase with the NYSE. Bottom Line: I do not like the Delta Airlines waveform in the period from 1999 to the present time. The 184-day trading cycle developed a significant amplitude that was way beyond any random trading action. It appears to have been the key cycle possibly used by some combination of hedge funds to attack US airline stocks possibly by a combination of straddles. I suspect there is outright shorting of Delta’s stock off a number of its tops but the one top that is suspect is May 2001 (also true for Northwest, United, USAir, etc). Strangely, Sept 11, 2001 occurred when the major cycles of virtually all airlines was reaching there maximum acceleration downward. This is a plausibility argument that in conjunction with other possible evidence (i.e., who was involved in shorting the airline stocks from May 2001 thru Sept 2001 and possibly other sectors of the NYSE around Sept 11, 2001) suggests concerted attacks on weak NYSE Sectors by hedge funds/large investors banding together and using the basic components of the NYSE waveform (such as the 184-day trading cycle)trading patterns. I seriously doubt the Exchange wants to disclose or discuss any such possibilities. By the way, the 184-day cycle in the NYSE is topping right now – watch out in a few weeks! Our airlines have reached a major bifurcation point – are we going to subsidize some while others such as SouthWest remain profitable? Are any airlines going to survive in the long run with escalating fuel prices!?
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INFORMATION DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, the author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments. |
