Can TUI shares begin travelling north?

Things couldn't get any worse for the travel sector at it was silenced by the pandemic. Now, independent analyst Alistair Strang looks at how shares might react as we emerge from lockdowns and enter the summer holiday period. 

Something remained absent from TV, when 2021 turned into 2022. Traditionally we all faced a barrage of travel company commercials, all of which were utterly wasted in 2020 and mostly wasted at the start of 2021. Travel companies obviously opted to play safe this year, forgetting to remind us a nicer world awaits outside the UK. The recent demise of a manager at Manchester Airport suggested travel companies may not be suffering, despite their lack of alluring commercials.

Apparently, Manchester Airport handled around 70,000 travellers in March 2021. This number nudged upward slightly in March 2022, over 2 million people slowly shuffling toward their aircraft. Management, however, remained in a mindset of 2021’s passenger numbers, hence the utter chaos. In fairness, this has effected other airports to lesser degrees.

It becomes obvious the travel companies will be experiencing an uptick in demand and, as a result, surely it’s just a matter of time before organisations like TUI TUI AG (LSE:TUI) mention a change in fortunes. Hopefully such a mention shall produce a result with their share price as it appears to be marking time at present.

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The share price for TUI Ag has remained, quite carefully, below the Blue downtrend since 2019. Equally, the price has studiously failed to exceed the point of trend break for the previous Red uptrend since 2020 and, conventionally, when we take these two signals together we’re supposed to anticipate the worst.

In the case of TUI, ‘the worst’ translates into reversal to an ultimate bottom of just 35p. Visually absolutely nothing about such a target level makes sense with the result that we smell a rat.

Source: Trends and Targets. Past performance is not a guide to future performance

It’s certainly possible, maybe even probable, TUI shall exhibit some final reversal before a break through the Blue line, one of these kind gestures by the stock market, designed to scare the heck out of traders prior to a sharp rise.

Should this be the game plan, we can calculate below 224p as threatening reversal to an initial 211p with secondary, if broken, at 192p and ideally the point where a bounce potential shall be discovered.

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Any bounce capable of exceeding 249p should prove interesting as we can work out an initial ambition now at 282p. Ideally with closure above such a number, our secondary calculates at 322p but, in fairness, TUI could easily sprint onward to the 426p level, a point where a vague glass ceiling awaits.

If our suspicion is correct, TUI should experience a sharp reversal prior to a surge upward. It’s marginally possible the reversal on the 11 April shall prove sufficient, but it really didn’t feel like the market was trying hard enough to scare the pants off folk.