Will Omicron clip Tui’s wings?
2nd December 2021 10:36
by Alistair Strang from Trends and Targets
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Trading at an all-time low, independent analyst Alistair Strang considers the travel company in light of another Covid variant.
When we previously reviewed TUI (LSE:TUI), we speculated on whether the troubled German travel company would bounce at 211p. Alas, its first reversal to our target happened last October with the share managing to briefly break 211p by a minimal amount on the first surge downwards. While the price appeared to bounce at 210.7p, we dare not ignore this initial break and now, with the share trading at 205p, we are curious whether the new Covid variant provokes further trouble.
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Importantly, the share price is now trading at an all-time low, rarely an encouraging signal, and despite the bounce from our 211p level being around 20%, the share price actually required exceeds 290p before ticking the first box to suggest safety. This resultant situation illustrates how unpleasant the market can be, when demanding a share price go up by 40% before it becomes a ‘safe’ buy can sound quite ridiculous.
The immediate situation for TUI Group suggests ongoing weakness below 189p risks reversal to 178p initially. We've fairly reasonable arguments anticipating some sort of rebound should such a level appear, especially as our secondary (should 178 break) calculates at a visually absurd ultimate bottom of 56p! Perhaps everything depends on whether the new virus variant justifies yet another ban on foreign travel, but we notice some conciliatory language now being used in the media, indicating that ‘they’ are finally starting to appreciate scare stories without foundation serve no purpose.
The alternate scenario, if we look for early signals that point to a proper bounce, suggest movement above 224p should bring an initial 230p. If bettered, our secondary calculation provides at 255p, this liable to prove important for the longer term. Closure above 255p should make ongoing recovery to 316p possible, taking the share price above the current blue downtrend into a zone where some safety can be assumed.
Source: Trends and Targets. Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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