TipTVFinance

Easy Jet - Should we trust the rally?

LSE:EZJ   EASYJET PLC ORD 27 2/7P
Easy Jet shares have finally witnessed a relief rally of sorts. Prices clocked a low of 973 on July 26 before jumping to a high of 1080 today.

The question now is should we trust the corrective rally in the shares. Fundamentals do not support the rally in prices… travel stocks are anyways under pressure, furthermore strengthening of oil             prices further is an addition to the bearish news.

On the technical front, the news is not good either-

  • The volumes have stayed below 20-day average through the current technical recovery.
  • The money flow index also suggests the corrective rally is more due to profit taking/unwinding of shorts.
  • Hence, the current rally may not be sustained. Moreover, gains have come after last Thursday’s BOE stimulus, which have triggered broad based gains. After the effect of stimulus wanes off the stock may resume the downtrend.

On the higher side, we keep an eye on 1177 levels, while fresh sell-off is seen once the recent low of 973 is breached.
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