Tuesday, August 25, 2009

Bookkeeping: Closing Allegiant Travel (ALGT) - Swine Flu Not a Threat?

As I scroll through the charts of positions on the long side, Allegiant Travel (ALGT) has one of the most challenged. It tried to rally through a key resistance the past 3 days and has been rejected - setting this up to be more of a short term technical short, rather than long. But truth be told, this one has a mind of its own and hasn't really traded in tune with charts since I've first started watching it.

We just had a placeholder type of stake so it stays on my first line of radar, but it's just been sitting there in purgatory for a while. So I am going to boot this for now and we'll reassess later.

Perhaps I am overreacting to the Swine Flu threat, but this really could be a big story if even half of what I'm reading comes to fruition.
  • Swine flu may hospitalize 1.8 million patients in the U.S. this year, filling intensive care units to capacity and causing “severe disruptions” during a fall resurgence, scientific advisers to the White House warned.
  • Swine flu, also known as H1N1, may infect as much as half of the population and kill 30,000 to 90,000 people, double the deaths caused by the typical seasonal flu.
  • The president’s advisory council describes as a “plausible scenario,” that 30 percent to 50 percent of the U.S. population will be infected in the fall and winter. “This is a planning scenario, not a prediction,” according to the report. “But the scenario illustrates that an H1N1 resurgence could cause serious disruption of social and medical capacities in our country in the coming months.”
  • The scenario projections were “developed from models put together for planning purposes only,” said Tom Skinner, a spokesman for the CDC, at a briefing in Atlanta today. “At the end of the day, we simply don’t know what this upcoming flu season is going to look like. It could be severe, it could be mild, we just don’t know.”
  • “This isn’t the flu that we’re used to,” said Kathleen Sebelius, U.S. health and human services secretary. “The 2009 H1N1 virus will cause a more serious threat this fall."
  • New Zealand and Australia, in the midst of their normal flu seasons, have reported intensive care units taxed to capacity by swine flu patients. The experience provides clues to what the U.S., Europe and Japan may see when the H1N1 virus returns.
While normal flu kills 36,000 a year - it's usually those high at risk in the senior community. H1N1 is a different animal and hence why if there is an outbreak, and scores of middle and high school kids take a hit; it's going to cause much more of a mania... if it was serious.
  • The median age of those with the pandemic virus has been 12 to 17 years, the WHO said on July 24, citing data from Canada, Chile, Japan, U.K. and the U.S.
Another highly susceptible group?
  • Pregnant women, who have “a disturbingly high burden of disease” from swine flu, only get vaccinated for seasonal flu about 15 percent of the time. Pregnant women are a top priority for vaccinations, she said.
Good news AARP age readers, you appear safe!
  • Seasonal flu usually kills about 36,000 Americans. Swine flu causes more severe illness needing hospitalization among younger people than seasonal flu, while leaving people 65 and older relatively unscathed, said Mike Shaw, associate director of laboratory science at the CDC’s flu division.
Yesterday the 'go to' momentum stocks in the "flu" area exploded higher, and I might potentially add one of them down the road if for nothing more than knowing if Swine Flu does come to America in a big way some of these could jump 100%+. Some of these stocks can pop 30% in 5 minutes if daytrader see a breaking news alert, so if we start hearing of mass outbreaks at schools or the like, it could lead to a large speculative move, even for the names that have zero to do with a vaccine. HAL9000 would help out with enormous buy programs as well, I am sure.

On the other hand, airlines wouldn't do quite so well in such a situation. Nor do I believe the "efficient" market is discounting any probability of something of this sort happening. We shall see - it's a big unknown.

No position

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