American Airlines Post-Earnings Rally Grounded

shares were trading sharply lower by $2.42 (4.4 percent) at $48.77 in Wednesday's session. With no relevant news out on the issue, let's examine the technicals for a clue to its steep decline and one other possible catalyst. The company rose off a Q1 beat for EPS and a slight revenue miss on April 24. That rallied the issue from its April 23 close of $51.45 to $52.71 the following session. However, it has been grounded ever since, not again reaching that price and declining to $51.19 by Tuesday's close. Perhaps some shorter term swing-traders made use of the dead cat bounce from the $47.50 to book some profits after there was no follow through from the earnings beat. After a lower open ($50.58 vs.Tuesday's close of $51.19), it briefly popped to $50.80 before the bottom fell and revisited its major support, reaching $47.66 and rebounding to its current level. Another likely catalyst that can be blamed for the decline is the $2 rally in crude oil. With fuel being one of the primary costs for airlines, they sometimes will move inverse to the commodity price movement.