Wednesday, 20 May 2015

DAL, UAL - airlines encountering turbulence

Whilst the broader market saw a day of minor chop, there was very significant weakness in the Transports. Delta Airlines (DAL) and United Continental (UAL) settled severely lower by -5.6% and -10.2% respectively. Near term outlook is bearish, with Transport stocks performing badly, despite Oil prices remaining relatively low.

DAL, daily

UAL, daily


From a pure price perspective, we saw some rather signficant technical breaks today, on what was extremely heavy sell side vol'

First, DAL, closing below the 50dma... with an intraday test of the 200dma
Second, UAL, a decisive break of the downward channel... taking out the 200dma.

UAL looks set to fall further, at least to the mid $52s. If correct, that should equate to DAL also losing the 200dma, and declining to $41/40 within the near term.

*I have long term confidence in both DAL and UAL, but in terms of long term holds, I favour DAL, being far more stable, in terms of price.. and as an overall company.