Folks, yet another American airline is facing financial hardship... Yesterday, Spirit Airlines (SAVE) announced that it has filed for bankruptcy.
The Power Gauge Spotted This Airline's Wipeout Years Ago
By Vic Lederman, editorial director, Chaikin Analytics
Folks, yet another American airline is facing financial hardship...
Yesterday, Spirit Airlines (SAVE) announced that it has filed for bankruptcy.
Now, that doesn't mean that the business is folding. Spirit has entered into a new agreement with its bondholders.
In an open letter to its customers, the company says the deal is "expected to reduce our total debt, provide increased financial flexibility" and "position Spirit for long-term success."
But that doesn't mean this is the start of a turnaround...
Spirit's stock has tumbled a staggering 93% this year alone. Put simply, the stock has been a disaster for investors.
And yet, it didn't have to be this way...
Our Power Gauge system saw this wipeout in progress years ago. So today, let's take a look at how easy this was to spot on the chart...
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When it comes to share-price collapse, the Spirit wipeout is about as bad as it gets.
Investors who bought the stock at the start of this year have lost nearly everything.
The bet wasn't that crazy on its surface, either. In fact, the Power Gauge currently rates the passenger airlines industry group as strong.
Looking closer, we see that Delta Air Lines (DAL) has soared roughly 57% this year. Over the same time frame, United Airlines (UAL) is up a whopping 119%.
So it makes some sense that investors were also betting on Spirit.
But with the Power Gauge, we can easily see why that was a terrible bet. Take a look at this five-year chart of Spirit's stock with some data from our system...
Today, Spirit earns a "very bearish" rating from the Power Gauge. Our system's ratings don't get any worse than that. But look at the bottom panel under the chart...
As you can see, Spirit hasn't earned a "bullish" rating since 2020. And even that little blip of a positive rating was incredibly short-lived.
Moving up, the next panel shows Spirit's relative strength versus the broad market S&P 500. And once again, it's a sea of red. Spirit has underperformed the market for years now.
Lastly, take a look at the Chaikin Money Flow panel right under the chart...
The Chaikin Money Flow is a technical indicator. Chaikin Analytics founder Marc Chaikin developed it back in the 1980s.
It measures the buying patterns that "smart money" buyers often display. In other words, it helps us identify institutional buying.
And as you can see, Spirit hasn't gotten a lot of love from the smart money over the past few years.
Putting it all together, Spirit has been in a rough place for a long time. The Power Gauge makes that clear.
Spirit's stock has been underperforming the broad market for years. Its relative strength has been atrocious. Meanwhile, the smart money has also been avoiding the stock.
Combine that with Spirit's disastrous financials, and it's no surprise the stock has spent so much time in "bearish" territory – even before the bankruptcy announcement.
Again, SAVE shares are down more than 90% this year alone. Investors who held this stock hoping for a turnaround have been crushed.
But the Power Gauge has made it clear to avoid Spirit. And with our system's help, we can also avoid other stocks like it.
Good investing,
Vic Lederman Editor's note: With its rating system – ranging from "very bearish" to "very bullish" – the Power Gauge helps find stocks poised for big upside ahead. On the other hand, it also helps sound the alarm on stocks that look primed to collapse.
And if you don't already have access to our one-of-a-kind system, you can get it as part of a special offer...
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Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.07%
10
15
5
S&P 500
+0.4%
143
278
75
Nasdaq
+0.69%
28
59
13
Small Caps
+0.2%
567
963
385
Bonds
+0.17%
Energy
+1.33%
1
16
5
— According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+1.81%
Utilities
+0.68%
Financial
+0.24%
Staples
-0.02%
Real Estate
-0.39%
Communication
-0.65%
Discretionary
-1.85%
Materials
-2.2%
Information Technology
-2.71%
Industrials
-2.97%
Health Care
-4.93%
* * * *
Industry Focus
Pharmaceuticals Services
2
26
17
Over the past 6 months, the Pharmaceuticals subsector (XPH) has underperformed the S&P 500 by -1.74%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #19 of 21 subsectors and has moved down 2 slots over the past week.
Indicative Stocks
LQDA
Liquidia Corporation
HROW
Harrow, Inc.
EOLS
Evolus, Inc.
* * * *
Top Movers
Gainers
SMCI
+15.93%
HSIC
+7.46%
MRNA
+7.22%
TSLA
+5.62%
CVS
+5.38%
Losers
AMTM
-9.64%
PLTR
-6.86%
UBER
-5.35%
BBY
-3.95%
LULU
-3.27%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
LOW, WMT
J, MDT
KEYS
No earnings reporting today.
Earnings Surprises
BTBT Bit Digital, Inc.
Q2
$-0.11
Missed by $-0.09
TWST Twist Bioscience Corporation
Q4
$-0.59
Beat by $0.10
ACM AECOM
Q4
$1.27
Beat by $0.02
* * * *
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