RTX - A PROXY FOR AIRLINES/AIRLINE INDUSTRY (RYCEY, AAL, BA)

已更新

Airlines have had quite the run up since the low. Warren Buffet is way past his prime.
BUT WTF IS THIS PRICE ACTION!?
I've done a fair amount of "research" into the numbers here and here's my best attempt to make sense of it.

We all know the COVID correction was the E wave of a triangle. That was obvious. You see it on every major index.
Triangles happen in wave 4's... so now wtf is this "impulse??"
The 3-3-3-3-3 wave structure points towards some type of diagonal for the bullish count.
This sort of chop is going to wash people out if you don't have a game plan.
Here's mine.

It's always critical to pay attention to RSI or some other momentum indicator to spot corrections.
We know RSI rarely exceeds ~70 in corrections and rarely goes lower than ~30 in uptrends. We will use this rule to define most of the PA.

We define the primary channel shown in bold.
and subchannels for each subwave in lighter color.
Annotations shown on chart.

We see waves A and B of 3 clearly.
When you get into the subdivision of C, that's where you have to pay attention to detail.
Two conflicting things are shown.
By EW rules you have another leg up. This also makes sense from the geometry of an expanding diagonal - you want to put in that awkward third wave.
This would align with a channel break which is typical.

However, if you look at the 4 hr RSI, you are already getting a reaction at 70. For this reason, I am not swing trading this last "potential wave up."
I am waiting for a retrace of wave 4... might take a few months.
However, I am still holding my long-term RYCEY as it is possible that stock pops during this last leg up.

You usually see w4 marked by the channel bottom, and w5 must be larger than w3.
For this structure, that would lead to a >50% gain.

Here is my Boeing BA chart as reference which shows a very similar sort of relationship in movement, albeit coiling down triangle rather than impulse.