Trading Spirit Airlines Into Earnings

Ed Ponsi

Spirit Airlines (SAVE) is down 58% year to date, but the stock has seen some wild moves to the upside and the downside this year. At one point, Spirit shares jumped 240% in less than a month. Earlier, the stock lost 85% of its value in less than two months. 

That's a lot of price action in a short span of time, and now the stock is looking at another increase in volatility due to earnings. Should traders climb on board and ride out the turbulence, or should they delay their departure? We'll go to the charts to find out. 

Let's compare Spirit to its individual competitors, and to the airline sector as a whole. 

The U.S. Global JETS ETF, which is a proxy for the airline sector, is shown in green. Any name appearing above the green line would be considered stronger than average, and names below it are considered weaker than average. Performance measurements are as of the beginning of this year.

Spirit, represented by the ticker SAVE in purple, is weaker than the sector and most of the stocks in it. Southwest Airlines, symbol LUV in light blue, was the best performer of the group (get more on Southwest Airlines here).  

Airlines

However, short term traders who are inclined to try their luck on Spirit do have one factor in their favor. Stocks like Delta Airlines and United Airlines have already reported massive losses. While United shares did experience a 4% selloff after earnings, Delta stock actually went higher after reporting a loss of over $9 per share. Stocks don't always fall on negative news, especially if that negative news is widely anticipated. 

Ed Ponsi is the managing director of Barchetta Capital Management, and is the author of three books for publisher Wiley Finance. A dynamic public speaker, Ed has made appearances around the world, in such diverse locations as Singapore, Dubai, London, and New York. For more information about Ed and his work, click here.