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What is a Bullish Abandoned baby?


Mark Michaels

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Hey Mark,

The investment banking giant, Morgan Stanley, recently commented on low-cost air carriers, saying Ryanair and Wizz Air are the best investment opportunities in terms of risk and reward, and that easyJet could become an attractive option if demand recovers quicker than anticipated.

Stocks of airline companies have rallied as global authorities started lifting travel bans, resulting in a 30% sector rise over the past two weeks. There’s a great difference in performance among air carriers in this year, varying from -19% for Ryanair to -60% for IAG, according to Morgan Stanley.

"At this point, we continue to see a better risk-reward in Ryanair and Wizz, though we think that if the recovery in demand is faster than our estimates easyJet could be an attractive investment option also," said Carolina Dores, an analyst at Morgan Stanley.

Countries like Spain, Italy, Greece, Cyprus and Portugal are lifting travel restrictions and planning to bring hotels and beaches back to service in July and August. As a result, shares of RyanAir advanced almost 12%.

The largest German airline, Lufthansa, is a step closer to securing the €9bn bailout from German authorities after the company’s supervisory commission approved the bailout package on Monday.  

Ryanair plans to appeal the funding plan. The company’s Chief Executive, Michael O’Leary, said the “illegal state aid” will let Lufthansa participate in below-cost selling and “distort” competition in the market.

According to analysts, easyJet is the cheapest while the Lufthansa is the most expensive when comparing share prices against earnings estimates, while Ryanair and WizzAir remain 12-19% below historical multiples. One of the reasons for such difference is because investors are worried about which carriers will have to mobilize capital, Morgan Stanley stated. 
 

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Hey Mark,

The Bullish Abandoned Baby is a reversal candlestick pattern, consisting of three candles. The pattern takes shape at the bottom of a trend. To help you identify the pattern, the first candle can be any long and bearish candle. The second candle should be small and a bearish candle, or a Doji candle. Finally, the last candle can be any long and bullish candle.

I should mention that the second candle doesn’t overlap the other two candles, and as a result, a gap forms.
 

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