Airasia & AAX: Cloudy with a chance of meatballs

Cloudy with a Chance of Meatballs. The title of a popular animated movie in 2009, which aptly describes the outlook for Airasia and AAX for the next 1-2 years.

Airasia is rallying upward this morning. At the time of writing this post, it is trading at RM2.71. This means that Airasia is above its uptrend line (SS) as well as above the giant expanding triangle (ABCD). If it can surpass the intermediate downtrend line (RR) at RM3.00, the stock would continue its long-term uptrend.


Chart 1: Airasia's monthly chart as at Jan 13, 2015_10.30am (Source: ShareInvestor.com)

While we can't say the same for its sister company, AAX, we can see that this stock has found a base at RM0.60-0.62. Because of this base, it is no longer pushing against the downward channel. This could well be the beginning a slow turning for the stock. The next thing we like to see is a test of the upper boundary and hopefully a breakout. AAX's technical outlook reflects its poor financial performance, with huge losses from its new routes. This may change in the next financial year,


Chart 2: AAX's daily chart as at Jan 13, 2015_10.30am (Source: ShareInvestor.com)
 
For long-term contrarian investors, AAX may be a stock to consider. For the trend followers, you may get on-board Airasia on pullbacks towards RM2.50 or breakout above the RM3.00 mark.
 
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Airasia & AAX.