Why American And Delta Airlines Look Clear For Takeoff
On April 22 American Airlines reported an EPS decrease of 63% over the past year to ($4.32), which missed the Street estimate of ($4.30). The company reported revenues of $4 billion, a decrease of 52.93% year over year.
Delta Airlines released its earnings on April 15 and showed similar losses. Delta EPS decreased 596% year-over-year to ($3.55), which missed the Street estimate of ($3.13) and revenues of $4.15 billion, a decline of almost 52% year-over-year.
The markets are forward-looking and, with the COVID-19 vaccine rollout ramping up, a travel boom could be on the horizon which could help elevate American Airlines and Delta Airlines.
See Also: Stock Wars: JetBlue Vs. Southwest
The American Airlines Chart: After a bearish reaction to earnings American Airlines’ stock has begun to rebound. On Wednesday morning, the stock was trading under a resistant level at $22.58 and above a support level at $21.05
American Airlines stock is trading above the eight-day exponential moving average (EMA) but below the 21-day EMA, showing bullish indecision, and the eight-day EMA is acting as a support.
There are two gaps on American Airline’s chart. There is a gap below near the $14 level that was left on Nov. 24 and one above in the $26 range left behind on Feb. 24. With gaps filling 90% of the time, it is likely that both gaps will fill in the future, however, with the lower gap 35% below American Airlines’ share price the likelihood that it fills anytime soon is very low.
See also: How to Buy American Airlines (AAL) Stock
Bulls want to see bull volume come into the stock to push it back up over resistance near the $22.50 level which would cause the eight-day EMA to cross back above the 21-day EMA. If the stock can gain that level as support, it could make another run towards the overhead gap.
Bears want to see bearish volume drag American Airline’s stock down towards support at $21.05. If the stock can’t hold that level of support, it could trade down to $18.94 before finding another support level.
The Delta Airlines Chart: Like American, Delta Airlines also had a bearish reaction to its earnings report but has begun to rebound. Delta’s stock is trading below a resistance level at $48.32 and above a support level at $45.56.
Delta, like American, is trading above the eight-day EMA but below the 21-day EMA and the eight-day EMA is acting as additional support for the stock.
Delta Airlines has a gap below and above in its price history and similar to American Airlines, the gap below is unlikely to fill any time soon as it's 27% below the share price.
Bulls want to see Delta’s stock fly up over resistance at $48.32. This would cause the eight-day EMA to cross above the 21-day EMA, which would give bulls more confidence the stock is going higher. Delta Airlines’ stock could then make a run-up to its next resistance level at $51.81, which would put the stock in arms reach of filling the gap at the $56 level left behind on Feb. 24, 2020.
Bears want to see bearish volume push American Airlines’ stock below $45.56. If it loses that level of support, it could trade down towards $43.58.
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