Charting Delta Air Lines Stock's Turbulent Q3 Earnings Trade

Zinger Key Points
  • PreMarket Prep viewers were alerted to the $31 level, where there have been five daily highs since late September.
  • It's a potential sign of institutional sellers keying in on the level.

Along with the worse-than-expected reading for the September Consumer Price Index, there are a few good third-quarter earnings reports. One came from Delta Air Lines, Inc. DAL, Thursday's PreMarket Prep Stock of the Day.

Down Day, Then Up Day Ahead Of Report: Investors were indecisive about Delta’s results heading into the report. On Tuesday, when American Airlines Group Inc AAL announced that it was raising its third-quarter revenue guidance, Delta actually declined by 58 cents or 2% to close at $28.84.

On Wednesday's weak day in the broad market, the issue advanced by 37 cents or 1.3% to close at $29.21.

Q3 Miss, But Higher Revenue Guidance: Before the opening Thursday, the company reported quarterly earnings of $1.51 per share, which missed the analyst consensus estimate of $1.53 by 1.31%
The company reported quarterly sales of $12.8 billion, which missed the analyst consensus estimate of $12.91 billion by 0.85%. 

Delta announced that it is on track to achieve 2024 targets of over $7 adjusted EPS with $4 billion of free cash flow. The reason is the airline expects fourth-quarter revenue to be up 5%-9% from 2019 levels.

PreMarket Prep's Take: When it was being covered on the show, which was ahead of the CPI data, the issue was in the green by over $1 at the $30.50 area. Without knowing how the morning would play out from the report, the author of this article focused on potential resistance.

The $31 level was emphasized, as it was earlier in the week, with multiple highs flanking the level and making it a major resistance point. 

Since late September, there have been five daily highs — one just above $31.20 and four just below $31 — a potential sign of institutional sellers keying in on the level.

DAL Price Action: A swift decline in the index futures following the CPI report took its toll on the issue and it opened only slightly higher.

As the futures teetered, the issue spiked down, but found support ahead of the pair of lows Tuesday ($28.37) and Wednesday ($28.21), only reaching $28.52, and sharply reversed course.

The issue reached the aforementioned major resistance level of $31 during the session and ultimately closed 4.01% higher at $30.38. 

The discussion on the issue from Thursday’s show can be found here:

Photo via Shutterstock.

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