AMR: The Equity Market Was In Fact Right!

In a previous post, we noticed that the cost of CDS protection on American Airlines was increasing while the stock was going up, i.e., that the two markets were contradicting each other. I suspected the credit market knew something equities didn't know; well, it looks like the opposite was true: AMR's stock rose even further while the CDS spread (5yr protection on bonds) tightened violently.