3/7/2017 – Delta Airlines (DAL) Stock Chart Review
Delta Airlines (DAL)
Well, Delta Airlines (DAL) share price had a big move yesterday, a day after a member request came through in the Idea Chamber. I don't recall exactly, but I think DAL's big downwards move yesterday came after the company issued words of caution regarding margin pressure, or something to that affect. Regardless, it sent the shares sliding yesterday.
On a side note, in some recent quarterly filings it was noted that Berkshire Hathaway had recently accumulated shares of a couple of airline companies. According to this article from the Motley Fool, Delta Airlines (DAL) was one of the companies he purchased shares of. While that is encouraging, he also bought IBM and it took years for him to break back even on that trade. So while the "Oracle of Omaha" is considered a great investor, he doesn't always get the timing right.
Let's take a look at DAL's charts and see what may be in store for its share price in the coming weeks considering the caution just released by DAL.
DAL - 20 YEAR Chart
Delta Airlines (DAL) issued some sort of cautious warning yesterday about margins or something like that. Words of caution when a stocks share price is already near a resistance area is not a good recipe for share price increases.
This is a 20 year monthly chart for Delta Airlines (DAL). It shows 3 bearish candlestick patterns, all with resistance areas around the same price level. You can look up each of the bearish reversal candlestick patterns and their resistance areas on the Advanced Candlestick Patterns webpage. Just use the slideshow at the bottom of the page to find the candlestick you are looking for. Generally, when there is a confluence of bearish candlesticks all in the same area, the resistance area becomes tougher to break through.
The MACD Histogram seems to be telling a different story than the bearish reversal candlestick patterns. The MACD Histogram illustrates buying momentum that is increasing ever so slightly the last 2 weeks. This could be an indication that DAL's share price may attempt to push through the overhead resistance areas from the bearish candlestick patterns.
But if that attempt fails and DAL's share price does not break through the overhead resistance areas, the Fibonacci Extension Tool placed on the chart calculates some preliminary downside price targets. Those price targets would be the 61.8%, 100% and the 161.8% Target Lines. The 61.8% Target Line seems to fall in line with the green supporting trendline I placed on the chart. That is right around the $40 - $41 price level.
Let's see what some different chart views provide since the MACD Histogram seems to be moving unexpectedly bullish in the face of 3 bearish candlestick patterns.
DAL - Bullish Outlook
The above monthly chart had a MACD Histogram that was showing increasing buying momentum. One potential chart pattern to explain that is the Bullish Impulse wave pattern (waves 1-5) I illustrated on this 3 year weekly candlestick chart.
If Wave 5 of this pattern is to still develop, I would expect DAL's share price to find support around the $46.50 area during its current pullback. It should find that support before its next earnings report.
However reaping the benefits of a Wave 5 would appear to involve holding DAL's shares through its next upcoming earnings report. Waiting for the last potential push in an uptrend from an earnings report is risky. Especially after they just issued a warnings on their margins or something.
DAL - Moving Averages
This is a 1 year daily candlestick chart for DAL using moving averages and a Fibonacci Retracement Tool to measure the pullback that is anticipated from the bearish candlesticks on the monthly chart. The 200 Day moving average seems to align nicely with the 50% Retracement Line from the Fibonacci Retracement Tool.
The 50% Retracement Line and the 200 Day moving average provide for an estimated pullback area of $42, slightly higher than the $40 - $41 price range calculated on the monthly chart using a Fibonacci Extension Tool. The 61.8% Retracement Line, just slightly below the 200 Day moving average, does align with the monthly price targets though.
Delta Airlines (DAL) - Summary
Delta Airlines is either in the process of correcting or has very limited upside potential before it starts a lengthy correction. If DAL's share price finds support around $46 or higher, it is probable that one last push upwards to the $55 area could happen.
Waiting for the 1st pullback to the 200 Day moving average after the development of a Golden Cross pattern sounds a lot less risky to me. It also offers higher upside potential when purchasing shares at lower prices.
Use some of the above guidelines to trade DAL, but I would not consider it for a lengthy position in the portfolio until it can prove the 200 Day moving average will provide the necessary support for a rebound and new uptrend.
Good luck trading!