Just to clarify comments on shorting Qantas QAN I made on the run yesterday. Having reviewed it further I'm a bit uncomfortable with the short here and want further confirmation.
What's spooking me is the $500m buyback announced in QAN's results. I read a couple of days ago that it's likely Alan Joyce's last year as CEO. After the battles he's had, and with the SP high he won't want to let it fall back and undermine the story that he's turned around QAN on his watch. I see the buyback instead of a dividend in this light. $500m equals 3.5weeks volume at current prices. So Alan Joyce can buyback 10% of his shares a day for the next 30weeks to hold the price up.
If fund managers want out of QAN it won't matter, but the wind fall profits come from low oil, and the reversal of that is a medium term story over 6 - 12mths.
Just looking at the chart, the Rising Wedge proves fund managers have been distributing into strength. But it doesn't necessarily mean a price collapse. I was looking for more confirmation. The weekly chart broke down yesterday but the stronger monthly chart is still holding the wedge pattern and its sitting of 61.8% ATH support. My discussion with GJ above suggests these 61.8% levels are important.
Summary, the short set up is good, but I'm still awaiting confirmation of the start of a big downturn. I'm also uncomfortable shorting against a CEO with a warchest to prop up his shareprice.
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