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JetBlue Goes Hostile for Spirit; Here's What That's Doing to Its Stock Price

JetBlue stock is under pressure amid its hostile bid for Spirit Airlines. Here are the key levels to know now.

The airline space is making today a Merger Monday. Or at least, it's trying to. 

JetBlue  (JBLU) - Get JetBlue Airways Corporation Report shares are trading lower on the day, down about 4% after making a hostile takeover bid for Spirit Airlines  (SAVE) - Get Spirit Airlines Inc. Report at $30 a share. For its part, Spirit stock is up about 12% on the day.

The deal is an all-cash offer, which is nice for investors as it does not over-complicate matters like an all-stock deal would. As reported earlier at TheStreet:

“Spirit, which had been planning a $6.6 billion tie-up with low-cost rival Frontier Group Holdings  (ULCC) - Get Frontier Group Holdings Inc. Report and has twice rejected JetBlue's approach, citing the difficulty of receiving regulatory approval, has as least conceded that JetBlue's offer of $33 per share could be a "superior proposal" that shareholders may need to consider.”

Does that mean a $33 offer would get the deal done? I’m not sure, but for now, there is a bid in Spirit stock and sellers in JetBlue stock.

Interestingly, JetBlue was one of the best-performing airline stocks. You’ll notice on the weekly chart below that it actually recovered all of its Covid losses and momentarily took out its pre-Covid high.

Trading JetBlue Stock

Weekly chart of JetBlue stock.

Weekly chart of JetBlue stock.

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JetBlue stock is down in three straight weeks, but today’s action suggests we could be heading for a fourth straight weekly decline.

Last week, the stock traded down to and bounced from its 78.6% retracement. Currently below that level now, traders want to see if the stock can reclaim this mark. If it can and shares trade back above $10, then JetBlue stock could be looking at a larger rally.

Specifically, I would have my eye on the $11.50 area. That was support in March, which broke in April and became resistance earlier this month.

If the stock can press above that, then we could be looking at a push into $13. This was a prior support zone that turned into resistance. It’s also near where the declining 21-week moving average comes into play.

As for the downside, this is a key area for JetBlue stock.

The previously discussed 78.6% retracement comes into play near the psychologically relevant $10 mark, but also near a key area from the first and second quarter of 2020.

If JetBlue stock goes weekly-down below last week’s low of $9.22 and can’t reclaim this level, then we could be looking at a decline down into the $7.50 to $8 region.

Admittedly, that seems unlikely. But the levels don’t lie and if JetBlue can’t hold $9.22, then we have to start looking at lower levels.