Cathay Pacific Airways Ltd (HKG:0293) HEFFX Summary

Cathay Pacific Airways Ltd (HKG:0293) HEFFX Summary

Cathay Pacific Airways Ltd (HKG:0293) HEFFX Summary

Shares of Cathay Pacific soared in its best week of trading in almost a year as investors hoped reports of job cuts at Hong Kong’s flagship carrier would trigger a return to profitability.

Cathay rose the third-most this week among the Hang Seng Index’s 50 blue chips as of the midday trading break on Friday in Hong Kong, climbing 7.4% to HK$12.48. Since hitting an eight-year low last October, shares in Cathay have jumped 24.1%, nearly doubling the gain in Hong Kong’s benchmark during that span.

Germany’s national airline has praised Cathay Pacific Airways as the “perfect” partner with the carrier’s chief hinting at more scope for business deals with Hong Kong’s flagship carrier.

Lufthansa, part of the largest airline in Europe, talked up its expanded relationship with Cathay Pacific on air cargo services, and more recently, passenger flights.

The mutual tie up between the pair was just the beginning, according to the German airline’s chief executive Carsten Spohr, who was attending a gathering of airline executives in the Mexican resort city of Cancun. His airline’s ties to Cathay Pacific would become more important as it was similar to one with the Hong Kong carrier’s major shareholder Air China, he said.

Spohr said however he was not interested in buying a stake in Cathay Pacific, stating he was more interested in investing in airlines at home in Europe.

Troubled Hong Kong carrier Cathay Pacific Airways is laying off about 400 staff at its Lantau headquarters, the biggest cut in two decades, as part of its recently revealed redundancy plan, the Post learned on Thursday.

The layoffs are expected to be carried out by June 22, a month after the plan was announced. On May 22, the company said 600 of 3,000 head office jobs would be cut with no department spared except for frontline staff such as pilots and cabin crew.

Cathay Pacific Airways Limited is a Hong Kong-based investment holding company principally engaged in airline and related businesses. The Company operates through two segments. The Airline segment is engaged in passenger transport and cargo transport. The Non-airline segment is engaged in the provision of catering, ground handling and aircraft ramp handling services, as well as cargo terminals operation. The Company operates businesses in countries in Asia, Europe and North America.

Overall, the bias in prices is: Upwards.

Short term: Prices are moving.

Intermediate term: Prices are trending.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 11.32.

The projected upper bound is: 13.04.

The projected lower bound is: 11.80.

The projected closing price is: 12.42.

CATHAY PAC AIR closed down -0.220 at 12.400. Volume was 15% below average (neutral) and Bollinger Bands were 110% wider than normal.

Open         High         Low           Close         Volume
12.600      12.620      12.300      12.400      8,175,493

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period         50-period       200-period
Close:                      11.91                   11.34                10.94
Volatility:               44                       34                     29
Volume:                  21,438,302      10,589,540      8,123,945

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

CATHAY PAC AIR is currently 13.4% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of 0293.HK at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on 0293.HK and have had this outlook for the last 15 periods.

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 84.8315. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 10 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 64.66. This is not a topping or bottoming area. However, the RSI just crossed below 70 from a topping formation. This is a bearish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 0 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 134.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 10 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 16 period(s) ago.

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John Heffernan

John Heffernan is a Junior Analyst at HEFFX. John is studying Economics and is a contributor on equities at Live Trading News.

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