Delta Air Lines [Airlines; United States] falls in weak trading with rising open interest, weekly trend remains weak November 16, 2011

STOCKS Delta Air Lines (DAL.N) fell for a second day on Wednesday bringing its two-day fall to 48.0c or 6.0%. The stock price slid 42.0c (or 5.2%) to close at US$7.58. Compared with the Dow Jones Industrials index, which fell 190.6 points (or 1.6%) on the day, this was a relative price change of -3.7%. OPEN INTEREST TREND AND INTERPRETATION

Source Global Round Up - Stocks

Nov. 17, 2011

13 min read

STOCKS

Delta Air Lines (DAL.N) fell for a second day on Wednesday bringing its two-day fall to 48.0c or 6.0%. The stock price slid 42.0c (or 5.2%) to close at US$7.58. Compared with the Dow Jones Industrials index, which fell 190.6 points (or 1.6%) on the day, this was a relative price change of -3.7%.

OPEN INTEREST TREND AND INTERPRETATION

Price Change % 2-day 1-month 1-year DAL -5.96% -9.76% -42.36% Airlines -2.04% -3.76% -30.5% DJIA -1.44% 2.24% 8%

Same day trend: open interest rose 0.6% from 496,261 to 499,043. Combined with the price falling 5.2% this suggests the market is weak.

Trailing one week trend: open interest rose, ending a two-week streak of losses. Open interest rose 0.6% from 495,840 a week ago while the stock dipped 0.5% from US$8.0 a week ago. Combined with the decrease of price this also suggests the market is weak.

Trailing one month trend: open interest crashed 11.2% from 561,784 a month ago while the stock plummeted 9.8% from US$8.57 a month ago. Combined with the falling price this suggests the market is strengthening.

Open interest as % of issued capital: 49,904,300 shares, representing 5.9% of the issued capital.

[ranked 346 out of 1653 stocks in descending order]

Put:call ratio: open interest contracts on exchange traded options included 264,452 put contracts and 234,591 call contracts.

The put:call ratio was 1.1, up 2.4% for the day, up 0.7% in the past week and up 16.8% in the past month.

Top three traded call options [volume of contracts in brackets; 1 contract is 100 shares]

Exercise US$8.0; Expires Nov 19: 3.0c down 80.0% [1051]

Exercise US$8.0; Expires Dec 17: 29.0c down 35.6% [689]

Exercise US$9.0; Expires Jan 21: 24.0c down 22.6% [579]

Top three traded put options [volume of contracts in brackets; 1 contract is 100 shares]

Exercise US$9.0; Expires Nov 19: US$1.41 up 38.2% [764]

Exercise US$7.50; Expires Jan 21: 62.0c up 24.0% [250]

Exercise US$8.0; Expires Nov 19: 40.0c up 185.7% [220]

TECHNICAL ANALYSIS

Downtrend

Support: the support price is hovering at the US$7.50 level. Volume traded at the support price zone was 1.5 times average during the three occasions when the support price was breached. In the last month the lowest price was US$7.50 on Nov 10. The second lowest was US$7.565 on Nov 16 and the third lowest was US$7.65 on Nov 11.

Resistance: in the last one month the highest was at US$8.98 on Oct 24, the second advance halted at US$8.85 on Oct 27.

Trailing month: in the last 21 trading sessions there has been a net decline of 10.82%; the stock has retreated 13 times and the biggest one day decline was 5.2% on Nov 16.

PRICE VOLUME DYNAMICS

Volatility: the stock traded between an intraday high of US$7.95 and a four-day low of US$7.565, suggesting a trading opportunity between peaks and troughs. Today its volatility of 5.1% was 4.0 times its average volatility of 1.3%. A price fall on high volatility is a bearish signal. The average daily volatility of 4.2% places the stock in the 1st quartile in the market meaning it is highly volatile.

Volume: there were 9,692,793 shares worth US$73.5 million traded. The volume was 0.6 times average trading of 7,546,640 shares.

% Discount to high: the last price is at a discount of 47.3% to the 12-month high of US$14.38 a year ago on 26 Nov, 2010.

% Premium to low: the last price is at a premium of 18.2% to the 12-month low of US$6.41.

Volume weighted price (VWP): the price is at a discount of 8.7% to the 1-month volume weighted average price of US$8.303, which may appeal as a value proposition.

Beta: The Beta of this stock is 0.69. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

Standard Deviation (SD): SD is a statistical measure of deviation from the mean. The SD of 3.0% gives it a percentile rank of 75 meaning that 75% of stocks in the global market are less volatile than this stock.

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PRICE PERFORMANCE RANK IN SECTORS

The stock is in 2 sectors.

The following index and sectors fell setting the trend for its fall of 5.2%:

Airlines sector of 33 stocks traded today, which was down 95.1 points or 1.6% to 5,828.8;

Dow Jones Industrials index of 30 stocks traded today, which was down 190.6 points or 1.6% to 11,905.6;

The index of Top 5000 stocks by MCap, which was down 101.4 points or 1.2% to 8,250.6

Percentile Rank 1-day 1-month 6-months DAL 2 11 13 Airlines 32 32 29 DJIA 33 63 70

RELATIVE VALUATION INDICATORS [RVI] FUNDAMENTAL ANALYSIS

The stock meets the following value criteria set by Benjamin Graham:

-"An earnings-to-price yield of at least twice the triple-A bond"; the stock's earning yield of 9.2% is 4.49 times the triple-A bond yield of 2.1%.

Other Bullish Signals:

- Price/Earnings of 10.8 versus sector average of 11.1 and market average of 13.5.

- Price/Sales of 0.2 versus sector average of 0.4 and market average of 1.0. We estimate the shares are trading at a current year Price/Sales of 0.2 and a forward year Price/Sales of 0.2.

- The company is cash rich with Cash to Market Capitalisation at 45.1%.

Bearish Signals:

- Total Liabilities/ EBITDA of 12.7 is more than or equal to 5, this compares unfavourably with Joseph Piotroski benchmark of 5.

- Return on Assets of 1.4% versus sector average of 2.3% and market average of 1.7%.

- Return on Capital Employed of 5.1% versus sector average of 5.9% and market average of 10.8%.

The stock has a score of merely 3 out of 9 set by Joseph Piotroski [pass mark >=5 ]:

Positive net income; Positive operating cashflow; Good quality of earnings [operating cashflow exceeds net income].

RELATIVE VALUATION INDICATORS [RVI] TECHNICAL ANALYSIS

Bullish Signals:

- the price is below the lower Bollinger band of US$7.598; the Relative Strength Index (RSI) of 25.5 has breached the oversold line of 30.

Bearish Signals:

- The price dipped 0.5% in the last week and plummeted 9.8% in the last month.

- In the global market of top 5000 stocks by MCap, the stock has a 6-month relative strength of 13 indicating it is trailing 87.0% of its global peers.

- The price to 50-day EMAP ratio is 0.9, a bearish indicator. In the past 50 days this ratio has been under 0.9 just twice suggesting a support level. The 50-day EMAP has decreased to US$8.126. A decrease is another bearish indicator.

- The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) minus the 26-day EMA is negative suggesting a bearish signal. Both the 12-day EMA as well as the 26-day EMA are falling, another bearish signal.

- In the past 200 days this ratio has been under 0.83 75 times suggesting further downside. The stock is trading below both its MAPs and the 50-day MAP of US$8.118 is lower than the 200-day MAP of US$9.146, a bearish indicator. The 200-day MAP has decreased to US$9.146. A decrease is another bearish indicator.

- The price to 200-day MAP ratio is 0.83, a bearish indicator.

Breakdown:

- The bears are maintaining control with price open, high, low and close being below yesterday's levels.

SHAREHOLER RETURNS

Trailing one week: the stock fell three times (60% of the time) and rose twice (40% of the time). The volume was 0.8 times average trading of 37,733,200 shares. The value of US$1,000 invested a week ago is US$924 [vs USD1,011 for the Dow Jones Industrials index], for a capital loss of US$76 (or loss of 7.6%).

Trailing one month: the stock fell thirteen times (57% of the time) and rose ten times (43% of the time). The volume was 0.8 times average trading of 166,026,080 shares. The value of US$1,000 invested a month ago is US$902 [vs USD1,025 for the Dow Jones Industrials index], for a capital loss of US$98 (or loss of 9.8%).

Trailing one year: the value of US$1,000 invested one year ago is US$576 [vs USD1,109 for the Dow Jones Industrials index], for a capital loss of US$424. The total return to shareholders for 1 year is -42.4%.

The present value of US$1000 invested at a previous date is shown below:

PV1000 1-week 1-month 1-year DAL Stock 924 902 576 Airlines USD978 USD962 USD702 DJIA USD1,011 USD1,025 USD1,109

FINANCIALS

Quarterly Report released on July 30, 2011; year-on-year comparisons with previous corresponding period:

In the quarter to June 30, 2011 total revenue was up 12.1% to US$9.2 billion; net profit slumped 57.6% to US$198 million; EPS of 24.0c.

Annual Report for the year ended December 31, 2010 (year-on-year comparisons with previous corresponding period)-

EPS of 70.0 U.S. cents.

Favourable Changes: total liabilities to EBITDA down 64.1% to 12.7. While this compares unfavourably with the Joseph Piotroski benchmark of <5, the trend is favourable; although the Total Liabilities to Operating Cash Flow ratio of 14.9 also compares unfavourably with the Joseph Piotroski benchmark of <4, it had improved by 52.7% from the previous year.; total liabilities to total assets down 1.0% to 1.0; Sales to total assets up 15.6% to 0.7.

Unfavourable Changes: current ratio down 22.0% to 0.6.

Major Common Size Ratios: fixed assets to total assets up from 46.7% to 47.0%; other non-current assets to total assets up from 35.1% to 36.1%; intangibles to total assets up from 33.4% to 33.7%; total current assets to total assets down from 18.2% to 16.9%; cash to total assets down from 10.5% to 6.7%; EBITDA to Sales up from 4.4% to 10.5%; depreciation to sales down from 5.5% to 4.8%; interest expenses to sales down from 3.2% to 3.2%.

MARKET SHARE

Delta Air Lines vs Airlines sector [Airlines sector Total in Brackets]

Net Profit of US$593 million [5.9% of aggregate sector net profit of US$10.1 billion; down from 25.6% in the previous year.]

EBIT of US$1.6 billion [9.5% of aggregate sector EBIT of US$17 billion; up from -22.3% in the previous year.]

ISSUED CAPITAL

Based on 846,062,700 issued shares the market capitalisation is US$6.4 billion. It is the world's largest Airlines company by market capitalisation.

ACTIVITIES

It is the world's 3rd largest Airlines company by total revenue.

Delta Air Lines, Inc. (Delta) is an airline that provides scheduled air transportation for passengers and cargo throughout the United States and around the world. The Company's global route network is centered around the hub system it operate at airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Amsterdam and Tokyo-Narita. Each of these hub operations includes flights that gather and distribute traffic from markets in the geographic region surrounding the hub to domestic and international cities and to other hubs. Delta also has codeshare arrangements with Aeromexico, Air France, Alitalia, China Airlines, China Southern, CSA Czech Airlines, KLM Royal Dutch Airlines, Korean Air and Royal Air Maroc (and some affiliated carriers operating in conjunction with these airlines). On October 29, 2008, a subsidiary of Delta merged with Northwest Airlines Corporation (Northwest).

TOP MANAGEMENT

The chairman is Daniel A. Carp, the chief financial officer is Hank Halter and the chief executive officer is Richard H. Anderson.

REPORTED SELLING

Reported Selling: