American Airlines value fell 30% in less than 30 days, though recovering some of its losses the same day on March 4, 2025.
“This level of speed and severity has, in the past, overwhelmingly been followed by significant potential upside over the next 180 trading days,” said JP Morgan analysts Jamie Baker and James Kirby. “Simply put, in the overwhelmingly majority of cases that the market has deemed any situation so dire, so quickly, the market has ultimately been wrong.”
The analysts said that while its “down 30 in 30” trading rule doesn't guarantee American's future performance, but that the rule has “served [JP Morgan] well for decades”.
The rule has been used for over two decades and has acted as a simple rule for “defining market capitulation” that later rebounded strongly.
Since 1998, American has triggered the rule 22 times, the analysts said. “Of those instances, 12 resulted in [over] 50% returns in the ensuing 180 days,” analysts said. The average potential return over the following 180 trading days was 72%.
“This type of rapid, short-term correction has consistently afforded lucrative entry points in the past,” said the analysts.
United is also edging towards triggering the ‘down 30 in 30’ rule. United's shares had shed nearly 21% during the same period. The rule will be triggered if its shares drop to $76.30 before March 21, 2025.