Reader Request: American Airlines Group

By | November 9, 2014

08. Reader AAL chart 1

The strong rally in the airline stocks, reflected in the Airline Index ($XAL), is generally attributed to the drop in oil prices. Actually, the Airline Index and the price of crude oil ($WTIC) seem well correlated in the months leading up to the October spike. The index overall however, has done well this year and several stocks in the space have outperformed it, including American Airlines Group (AAL), with a 30% relative gain year-to-date. The move have been sharp though, and the stock price of AAL is back up to its June highs, with the Relative Strength Index and the Money Flow Index, a volume-weighted relative strength measure, both in overbought conditions. This week there was a series of high wave candles and one large dark candle on the daily chart, which suggest exhaustion and a potential top or the start of a consolidation period before the next phase of the rally. It has been 89 days since the company began trading under a new ticker symbol, which is a Fibonacci time retracement point. AAL is at an inflection point in time and price, and it will be important to watch the price action next week.

08. Reader AAL chart 2

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