Nice win on Xerox for me as my #1 trade idea issued on Friday…
As we kick off a new week UBS Financial Advisors are currently analyzing a stock which Warren Buffett has sold all OUT of.
Fortunately, I’ve identified exactly why Buffett sold his full stake in this stock, and exactly how I want it to trade it as well.
Many stocks in previously well-performing sectors of the stock market have had their balance sheets turned upside down in 2020. It’s no secret that the COVID-19 pandemic has impacted the health of many businesses around the world, and investors have updated their stakes as a result.
One of the companies which has suffered in 2020 is American Airlines (NYSE: AAL). In fact, as you may recall, Warren Buffett sold his full position in American Airlines.
On Thursday and Friday of last week AAL became tremendously overvalued as a stock. Political news caused a short squeeze, traders bought into its pop, and the stock doubled in price-per-share.
But let’s remember, Buffett sold out of this stock entirely, and for a very valid reason as well…
AAL has seen its balance sheet turn upside down in 2020 as their business has plummeted, there have been constant falling outs and turnover in their executive staff, and they’ve lost business to discount airlines, such as Spirit Airlines (NYSE: SAVE).
One of the single strongest determining factors which investors such as Warren Buffett look into prior to making an investment and while managing open investments is the strength of the company’s balance sheet.
AAL likely has the worst balance sheet of any airline stock right now, therefore debatably making it the least appealing airline stock to “buy on a dip.”
My trading plan with AAL this week is to keep a close eye on its 200-day simple moving average line, shown in white in the chart above.
Should AAL consolidate or make a green-to-red move, rejecting its 200-day simple moving average line, I’ll initiate a short position, especially if I’m trading alongside put option sweeps or multiple dark pool prints.
As of right now, I am short biased on this stock. Let’s keep in mind Buffett sold his shares around $10/share. I don’t think retail traders know more about the stock market than Buffett. I’ll patiently wait for my pitch on AAL, and strike when the time is right.
Yours for TrackStar trading,
America’s #1 Premarket and Day Trader
P.S. Every single day this week I’ll be posting a brand new video lesson on this Twitter account. I’ll be covering tactics which have helped accelerate my trading in 2020, one day at a time. Follow this link.
Disclaimer: This is not investment advice. This article is for information purposes only and opinion-based on financial advisor data across a selection of websites. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions.