TrendSpider Thursday Analysis: Airlines Ready to “Fly”?

Taking a look at Wednesday charts into Thursday morning’s open is a great way to get an idea of the overall market direction for the week but also an idea of what the rest of the week may hold. As the $DAL and other airline stocks seem to be forming an interesting lower indicator setup, it looks as if these beaten-down stocks may be next to gain some momentum. Check out our blog to see the charts of $DAL, $UAL, and $LUV into Thursday’s Trading.

$DAL: Daily Candle

1. The price DAL was rejected hard at the SMA (20) on 1/16 with sellers in control the remainder of the day. Based on the backtest of the lower indicators, if this materialized once again, a move to the EMA (50) above would be possible.
2. The Vortex Indicator is converging after large divergence occurred between the VI- and VI+ at the 1.2 and .7 threshold.
3. The MACD recently crossed which generally occurs after the RSI moves out of oversold conditions.
4. The RSI recently bounced outside of the oversold territory below 30 which has been the first indicator to show a reversal within this megaphone price channel.

$UAL: Daily Candle

1. The price of UAL gapped up big after beating estimates on revenue and profits today.  However, the price failed to continue momentum up during intra-day trading with a close right above the EMA (50). Notice the price moved exactly to the EMA (50) which is the same moving average we are watching on DAL above.
2. The Vortex Indicator is converging after the divergence between the VI- and VI+ ended right below the 1.2 and .7 thresholds mentioned on the DAL chart.
3. The MACD crossed today confirming bulls are gaining momentum and plenty of room to move up to the histogram zero-line.
4. The RSI broke out today to new highs not seen since the bounce out of the oversold territory in late December.

$LUV: Daily Candle

1. Southwest Airlines is looking a little different than the other two charts with price action moving up rather strong over the last few weeks. Today, the price of LUV was rejected hard at the falling wedge resistance which also coincides very closely with the EMA (50) which the price failed to hold. If this area did happen to break to the upside, the next area to watch above would be the previous support that has a price alert current set on it for a bounce, touch, or break through this area.
2. The Vortex Indicator is in the process of almost crossing as the convergence of the VI- and VI+ started a few days before DAL and UAL. However, the last VI cross on LUV proved to only provide a few more days of upside before a reversal. It will be interesting to see if this holds true this time around.
3. The MACD looks healthy with a possible break of the zero-line if the price can recover and move above the falling wedge resistance. This is shown by the histogram continuing to show an increasing bar.
4. The RSI is near where it reversed at the prior falling wedge resistance. However, there is room to move up if momentum broke to the upside.