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It's a bad day to be an airline... but it's a day we've seen coming for a while.
Airlines have been one of the hardest hit, if not the hardest hit sectors by the coronavirus pandemic. The losses are staggering, like a $5 billion loss for American Airlines Group Inc. (NASDAQ: AAL) and a $3.3 billion hit for United Airlines Holdings Inc. (NASDAQ: UAL).
There's a high human cost, too - corporate bosses have said 19,000 jobs will go at American, and 13,000 at United. That's another 32,000 people added to the 11.8 million Americans filing continuing unemployment claims.
This outcome isn't what we'd hoped for, but Congress just hasn't been able to pass the trillions in fresh stimulus needed to throw the airlines a $25 billion lifeline.
Of course, those jobs, and maybe lots of others, could come right back if the right deal is made, but it'd be a mistake to count on that.
The same is true of investing and trading right now - sure, a big, broad stimulus rally could happen, but don't bank on it.
Here's what I'm doing instead...
Long-Term Profits Could Be In Store
Any way you slice it, 2020 is going to be a wash for not only the travel and leisure segment, but also broad slices of the economy. The outlook for 2021 - the soonest many officials agree we'll have a vaccine against the novel coronavirus - isn't much better.
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That may sound strange, given that UAL and AAL shares are actually rising slightly as we speak. But they're still down by 59% and 56%, respectively, for the year. The shares are rising because stocks tend to do that when management announces "cost-cutting" measures, no matter how bad. Walt Disney Co. (NYSE: DIS), which just announced 28,000 layoffs, is another example of that.
All this bump is doing is burning traders who got too short on these stocks for too long; it's not the beginning of a turnaround.
I'm not chasing airlines - in either direction - at all right now. Even if we do by some long shot get stimulus soon.
Even though I expect profits either way, I haven't exactly been shy about saying we're probably in for more downside volatility on the broader market.
I think a speculative stock that could see a turnaround sooner than most is Carnival Corp. (NYSE: CCL), though we're probably at least six or seven months out from that.
And, again, I'm not banking on stimulus to kick-start that recovery.
There are people chomping at the bit to start cruising again, but I don't see the same enthusiasm for business travel even when it's safe to do so.
I recommended some very specific, very fast-moving CCL calls for my subscribers recently - we were in and out in a day with some profits in a "take the money and run" scenario.
But at the other extreme, long-dated CCL calls into mid to late 2021 are a great, inexpensive way to speculate on what could be a ferocious turnaround for the cruise industry.
That's one of the very few long-term positions I'm looking at right now. Most of what's on S.C.A.N.'s radar should move much more quickly.
Very Big, Very Fast Profits Are Likely Here
In the short term, I'm being extremely selective about the trades I'm recommending for my paid-up subscribers.
But even out of a narrow list of stocks, we're still seeing some great opportunities come up. Some of my most recent "watchlist" positions hit their profit targets in just a few hours.
Here are the other companies I'm expecting fast, short-term moves from here in this first Q4 "watchlist" I can share with you; I shared it with my subscribers over the weekend.
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It's important to mention these aren't buy-and-hold recommendations. I don't love these companies; I don't hate them. I just have strong evidence that they're going to move.
If you've seen these before, you'll notice it's not quite as big, but there are some big names and big movers here...
Titan Machinery Inc. (NASDAQ: TITN) is based in Fargo, N.D., with a heavy presence throughout the Midwest. It sells farm and industrial equipment and has seen a spike in short interest lately.
Twitter Inc. (NASDAQ: INC) is never not in the news these days; maybe it has something to do with the fact that it's the president's medium of choice for getting his message out there, more important than even the White House briefing room. This is one stock that could yield long-side profits.
Datadog Inc. (NASDAQ: DDOG) offers monitoring for companies with a presence in the Cloud, and it offers software-as-a-service (SaaS) analytics to its customers. Options on this stock brought some one-day triple-digit profits to a special group of my subscribers last week and could be up for a repeat performance.
Nikola Corp. (NASDAQ: NKLA) - the "electric truck-maker" that (apparently) hasn't made any electric trucks yet. This company has been heavily featured in business headlines lately - for terrible reasons, as I mentioned two weeks ago. But it's like I always say - a stock doesn't necessarily have to move up for you to make money on it.
Altria Group Inc. (NYSE: MO) is arguably the world's biggest producer and marketer of tobacco products like cigarettes, cigars, "RYO," etc. Smoking is definitely on the decline here in the United States, but it's growing in several of Altria's global markets - as often happens in times of stress. This company is down double digits, and it could be poised for a breakout or, just as likely, a trip lower.
That's all I can share about these companies right now; I have to keep the actual trade recommendations for my paid-up subscribers. I'll be watching these companies for proprietary S.C.A.N. signals to give us the earliest possible moves - stimulus or not - but anyone can watch and trade these stocks.
To find out how to get access to my S.C.A.N. signal recommendations - and any recommendations I might make to my subscribers on these watchlist stocks - go here to learn more.
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About the Author
Andrew Keene is a globally known trader and a renowned expert on all things options.