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Plane crashes near Rockaway, NY

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Just prior to today's opening of stock trading, reports of an Airbus A-300 twin engine plane departing from John F. Kennedy (JFK) Airport in New York on route to Santo Domingo, Dominican Republic, has stocks seeing selling pressure. The FAA confirmed that American Airlines flight 587 is believed to be the plane involved in the crash. At this time, the plane is believed to have held 247 passengers and 9 crewmembers. At this time, there is little information indicating that terrorism was a cause of the downed airliner.

The fact that the plane crash comes so near the World Trade Center terrorist actions, has many market participants worried and some defensive action has been taken in some positions.

The city of New York has taken some defensive action too. All airports in the New York City area have been closed, as well as bridges and tunnels leading to the city.

Some early eyewitness reports are that one of the engines of the plane may have separated from the aircraft immediately prior to the crash, but these are only early reports.

Airline and hotel stocks are feeling the brunt of this morning's selling pressure as sectors are showing declines in excess of 6%.

Airline Stocks - Sorted by volume 10:30 EST

The above list of Airline stocks (sorted by volume) shows that the bulk of stocks in the group are under some selling pressure. AMR Corporation (NYSE:AMR) is the parent of American Airlines and its plane and flight American #587 is the reported plane involved in today's crash.

Hotel and Motel Stocks - sorted by % change

I've also sorted the Hotel/Motel stocks by volume to give subscribers some insight into what is taking place here. Cendant Corporation (NYSE:CD) is active. Cendant (CD) is heavily involved in the service side of the travel and leisure industry. The travel division houses franchised hotel and operates car rental businesses.

Cendant Corporation Chart -

Conventional retracement on the Cendant (CD) chart gives traders some good level to be monitoring and controlling their investments with. A break below the $13.24 level and 61.8% retracement could have traders/investors taking some defensive action and looking to hedge their positions. Next support from that level looks to be the $10.68 level, which also served as support in late September, just after the terrorist attacks on the WTC and Pentagon on September 11th.

For information on hedging, please read the "Bailey's Basics" section of the web site.

Jeff Bailey
Senior Market Technician
Option Investor

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