Descent Continues for Airline Stocks LUV UAL DAL

Jun 9, 2015: 10:01 AM CST

After reaching cruising altitude, airline stocks have begun their descent to lower levels.

Let’s update our earlier post and chart the new breakdowns on selected airline stocks in new downtrends.

We’ll start again with Southwest Airlines:

Be sure to study my prior post from May 25th:  “High Flying Airline Stocks form Textbook Rounded Reversal.

We can see how price continued to trade in the “Rounded Reversal” direction.

These “Rounded Reversal” or “Rounded Arc Trendline” patterns are also called “Mirror-Image” Patterns.

Nevertheless, it’s actually a good analogy to use an airplane flight plan.

Price starts at ground level (a sideways base/range), breaks into an ascent, reaches cruising altitude (another sideways range at the highs), and then descends back toward earth (the prior base).

Keep this logic in mind as you view and possibly trade the stock movement in each of these names.

Southwest broke under the $40.00 level to accelerate the descent, and May saw distribution volume as the descent intensified.

We’re seeing a continuation and return toward the $33.00 level and likely even lower than that.The same logic – the Arc and Descent – applies to United Airlines (UAL):

Note the ascent, cruising altitude, and then descent pattern.

That’s the left side, top side, and now right side of a “Rounded Reversal” or “Arc Trendline” Pattern.

The trade is to short the retracements – or hold a core position short – after the breakdown begins.

For UAL, the breakdown and reversal became official under $65.00 per share and we’re back toward $50.

Note the distribution volume and potential for even lower prices yet to come toward $40.00.

Finally, we’ll add Delta Airlines to the mix (it wasn’t covered in the prior update):

Delta (DAL) stabilized longer at the cruising altitude (range) and only now is breaking powerfully lower.

Note the $41.00 per share level and today’s breakdown impulse into the full descent.

Even if you aren’t trading these bearish “return to earth” candidates, study them for a textbook example of the formation and resolution of one of my favorite larger-picture price patterns.

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Corey Rosenbloom, CMT
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2 Responses to “Descent Continues for Airline Stocks LUV UAL DAL”

  1. A Takeoff and Bounce Reversal for Delta Airlines DAL | Afraid to Blog Says:

    […] for Delta Airlines DAL Jul 15, 2015: 1:28 PM CST Recently we’ve been discussing the “Arc Trendline” Pattern in high-flying Delta Airlines (and similar companies) but now we’re seeing a lift-off and […]

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