After getting beat down like a rabid dog in the beginning of the crisis, Delta continued to sell-off and reach new lows as recently as last week. This dramatic drop has taken us from a previous high at $63 all the way to the current trading price at under $23 which makes sense given the severity and uncertainty of this crisis. but in the last 24 hours we've seen headline after headline showing signs of Delta getting back to business Delta to resume flying major routes in June more summer flights seen as travel slowly Rises Delta boosts flights further on rising demand Delta to add more planes if demand increases And with all this news, Delta went up about twice as much as the overall market today. But the question is is Delta A by at $23 what should you know before buying Delta when should you buy Delta And how can we use Delta to make money? Because as traders were greedy, we're greedy folk and in this video we will be diving brutally, yes, brutally into this topic.

But the only thing that I ask in return for this video is that you hit that ravishing like button. Also, take a moment to let us know what you think. Do you agree with my analysis or do you think my analysis belongs in a circus? Let us know below. Ok, so to start about a month ago we talked about whether American Airlines was a buy at the then trading price at thirteen dollars and we talked about how American Airlines was the Ugly Duckling amongst the other Airlines and how it had already been selling off for quite some time even prior to the crisis.

We also talked about how despite the fact that the analyst monkeys were raving about how American Airlines was such a good deal, American Airlines was actually quite straddled with debt and was more straddled with debt than all of the other major airlines even before the crisis. But the reason that I'm bringing up American Airlines is because if you compare Delta to American Airlines, well, Delta's pretty much the exact opposite. While American Airlines had been selling off, Delta had been in a consistent long-term uptrend for years years prior to this crisis. and when we are talking about pre-crisis financial health, Delta went into this crisis with substantially less debt as compared to American Airlines and it went into it with more amount of cash on hand not nearly enough cash on hand for a crisis like this, but more cash on hand that's compared to the average and went into it with six billion dollars, which for perspective, this is enough to cover its daily expenses for about two or three months before running out of cash.

But Delta also got the lion's Share rahrr of government aid to the tune of 5.4 billion dollars, which almost doubles their cash on hand and will allow them to stay solvent until September at this current cash burn rate, but this also comes at a cost. In order to take this money from the government, they needed to agree to not furlough or fire their employees until the end of September. But what this means in effect is that they won't be able to slow down their rate of cash burning because they can't go and fire their employees. Obviously here, a dip trader, we don't want people to lose their jobs.

but if you're looking at this from an investor standpoint, this is a problem. There's always that one person in the comment section that's like you're so greedy, you're such an annoying capitalist. Pig Again, I'm not in favor of people firing workers, but the reality is, if you have a certain amount of cash, you have a certain amount of money coming in and then you have money going out to workers that aren't in demand. All of a sudden, you're in the situation where hey, you're in for a problem.

And for me, I understand that some people are morally opposed I will personally pull money from companies that I feel are going to be bad. Like what? why would I hold them? But you see, this deal actually came at quite a cost for Delta because now they can't actually furlough or fire their workers until September. So that's a huge problem from an investor standpoint because now they're not going to be able to cut back on while they're expensive. So again, be realistic.

not being able to furlough or fire your employees is a huge liability until September And that's something that Delta has to deal with. So the only way Delta can hope to fix this overall income picture is to well spruce up their revenue. And now with Delta slowly starting to speed up with the overall sector, the financial picture is looking ever so slightly less bleak for them factoring in higher demand. the summer investors are already rallying up an airline stock prices.

But let's talk about the underlying elephant in the room. the risk as we move to reopen Airlines Now there's a lot of growth potential as revenue for Delta and most airlines are down more than 90 percent in many cases and even out reduced capacity which is inevitable. It wouldn't be hard to double or even triple company revenue as compared to what it was and say March or April, but at the same time, airline travel demand is going to be cyclical. It's yet to be seen how new potential outbreaks are going to affect travel measures and demand, and it's also yet to be seen how long investors are going to be willing to deal with fluctuating prices in the airline sector.

Big names like Warren Buffett and other large firms have already started dumping capital, because think about this for a second. if we are looking at the Delta Airlines chart, back to Delta's optimal output level here. That gives us a lot of upside. But as traders, how long is it going to take for us to realize That upside.

Sure, you can make a strong argument for investing in this long term, as eventually everything will fade away and we'll have an optimal level of growth. But as traders, if you were thinking of buying and holding this for less than a year, there's nothing that leads us to believe. There's nothing at least concrete that leads us to believe that the airline sector is going to return substantially anytime soon. So if you're to buy it right now saying, oh, by the end of the year, it's gonna go up substantially.

Well, there's nothing specific that's going to lead you to that conclusion, except for pure speculation. Thing is, we don't have a vaccine, and if we don't have a vaccine, airlines are going to be operating at some sort of reduced capacity for perhaps years. And it's not hard to say this is going to transform the balance sheets and profitability of these companies in that time span. So sometimes and at some point, you have to ask yourself about position efficiency.

Is this the most efficient way to invest your capital If the potential in a position like this takes years and years of uncertainty to actually realize, is this the best opportunity for us as traders? Because as traders at the end of the day, our capital is for trading off short term price fluctuation? But if you are looking at this from a very long-term perspective, I can definitely see the argument for buying. Delta Delta is an above-average airline company in the U.s. in terms of, well, financial health. It was doing well and growing before the crisis and what's it weathers this storm? it'll be on a good track to return to that.

So in terms of buying now and holding for years, this may not be the best entry point as we're likely going to see more crashes. but at the same time, it's not a terrible entry point because if you realize the upside and you hold it for years, hey, you know what? What are you missing? A couple dollars of upside? So I can definitely see the value in holding this long-term but in terms of trading, this just really isn't that great of a buy unless you're specifically targeting the price fluctuations If you're just planning on buying it and holding and hoping until December Well, that's a gamble, right? Because we don't know exactly how this is going to trade. A lot of people are saying oh, you should buy it here at the Dip because the analysts wanted you to buy here. Everybody wanted you to buy it here.

Your grandma wanted you to buy here, Your mom, your dad, everybody, your cousin below. everybody wanted you to buy here, but it still dipped more. So who is to say that by the end of the year, this is going to recover substantially. Who's to say that it's going to recover at all? We don't know.

but we do know there's going to be some insane fluctuations to trade off of. and that's why we love being traders. But Charlie How are you going to be playing? Delta Well, because Delta has been beaten down so much and is in a sector that has so much of a focus on it. now, we have a huge probability for Catalyst plays that cause huge run ups if you look back at the chart.

since mid-march the only loser with the stock was the one that decided to randomly hold in hope. but we as traders, we don't hold it. Hope instead. if you were a trader who trades off the price action, DAL has actually moved quite a bit, providing five clear run ups over the SMA.

And even though this is a trash sector right now, if you had bought in literally any time it was oversold and just held out until it was overbought, you would have made money. now. obviously this is sort of like saying buy the dip. but the thing is, if we combine different factors and the fact that we are trading so low, any positive news, Catalyst can spike another one like these and provide us insane fluctuations to trade off of.

Oh by the way, quick plug people keep asking me what broker to trade these talks on and I always tell them but they keep asking so I'm gonna keep telling. We always like to send new traders over to Weibo They are a very powerful platform and they are offering one free stock if you sign up and another free stock valued up to $1400 if you deposit more than $100 So that's a pretty good deal for trying out a free broker that's also very powerful. So if you are broker curious, feel free to check them out with that link in the description below. Okay, but back to Delta.

It's also worth noting that tons and tons of people just keep saying like, oh, the only reason that stock went up is because the overall market went up. But one of the things that you need to know is certain stocks. They correlate more or less with the overall market. They don't have a perfect correlation with the overall market because of the situation that they're in, but they tend to run much more dramatically as money inflows into the stock market.

So for example, today, the market went up about 2% but DAL went up twice as much Four point, four percent and on Monday when the market went up nearly four percent, DAL went up 15% So understanding that the flow of capital into the market tends to benefit the ones that have been hurt the most by the crash, gives you sort of an edge in determining what setups to trade in which to take advantage of. When you see that we have strong price strength in the overall market, this is a great tool to have because on days and we have strong market direction, we focus on sectors that benefit the most from the influx of capital, and those sectors are usually, of course, the ones that have been hit the hardest by this crisis. Okay, Lastly, for folks who are uncomfortable with the idea of buying Delta or Southwest or American Airlines, you could also bet on the entire race instead of just betting on one horse. you need to be aware of Jets Jets is an ETF with notches Delta in it, but also Ugly Duckling American Airlines Southwest United sky, West Alaska JetBlue and so forth.

And the best part about Jets is it isn't a leveraged Etfs, though it doesn't have decay and is fit for swing training. The perk of trading in ETF like Jets is you lower your risk of just buying one company and having it go bankrupt or abruptly change based on some random news event with jets. You are also literally buying the entire sector and so it provides more stable price action, and more protection from that overall risk. But at the same time, there's always two sides to every coin.

And while this does provide less risk in terms of individual stock risk, it provides less upside as well Because the sector as a whole is more stable versus individual stocks or more. they're more dramatic. so you get less fluctuations, which means less potential. so it's kind of a pro and a con balance.

and it depends on your own personality. Whether you're day trading or swing trading, these tend to be the best for swing traders who just want really conservative movements. Obviously Delta can be a strong swing trade as well, but it's going to be a little bit more actively managed right? If something happens really quickly, you're going to need to know and you're going to need to set alerts first is something with Jets Hey, it's going to be a little bit more stable so you don't have to deal with the same sort of fluctuation. But anyways, folks, if you have any questions, feel free to reach out to us.

In the comment section below, Are you going to be buying Delta this week? What is your plan for Delta Let us know: Is there another airline stock that you have your eyes on? Let us know. And also if you'd like to keep up to date, up-to-date folks with all of the stocks we are watching, you can join us for free at our zip trader circle. Facebook Group there I post nightly watch lists every night by the nature is being nightly so you can check us out there. And lastly, if you are looking to learn how to trade, we are offering $50 off that traitor you for folks who type in coupon code, stay home 20 20 before checkout and I'll put the link in the description if you'd like to learn whether or not we are a good fit for you.

Anyways, folks have a great day and I'll see you in the next video.