Looking to fly higher with JetBlue

• Posted by Greg Harmon
• on August 11th, 2015

Airlines have been big beneficiaries of the lower fuel cost. If you look at the chart of most of them it is like they are on a full power takeoff path. And the chart of JetBlue ($JBLU) is no exception. That is great if you have been holding the stock for the last 9 months. But isn’t it too late to buy it now? Not really.

The first thing to remember about stocks is that you can buy low and sell high, which is a good thing. Or you can buy high and sell low, not recommended. This is the fear that comes to mind when a stock has been in an uptrend for 9 months. That you will buy the top and lose it all. But there is a third choice, buy high and sell higher.

In fact the best place to look for new stocks to own is the new 52 week high list. That is because stocks that are going up tend to keep going up. Not forever, but they can for a long time. JetBlue fits this category and looks to be a good buy now or upon making a new 52 week high. What gets left out of the discussion is whether there is a place to mange risk in the new stock.

JetBlue gives you a few of options for that. The first is at point A. If you buy this stock on a new all-time high over 24.19 you could use a very tight stop at the trend line at 23.90. A bit looser stop loss placement at point B will get you out of the stock if it crosses the 20 day SMA, a line that has been a good approximation of bullish or bearish trends in the stock. And a wider stop at point C will protect you against JetBlue crash landing to a new lower low.

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