Delta Airlines Could Soar For A While

 

US Airways (NYSE:LCC) led an industry-wide rally on Tuesday after industry executives said they have not yet seen any signs of a contracting economy in their September bookings and stated plans to reduce their seat capacity.  Shares of airlines have been under severe pressure so far in 2011 and the Guggenheim Airline ETF (NAR:FAA) is down almost 30% year to date. 

One stock that particularly caught my attention yesterday was Delta Air Lines Inc. (NYSE:DAL). 

The weekly chart turned down in January after the stock broke the up-trend dating back to early 2009.  The stock has been trending down ever since. 

 

The daily chart of Delta Air Lines Inc. (NYSE:DAL) shows a wedge that yesterday resolved to the upside and by so doing the stock also broke back on top of its 50 day simple moving average (blue line).  Keeping in mind the high correlation among stocks and the broader market down-trend, Delta Air Lines Inc. (NYSE:DAL) does offer a decent long-side entry here regardless.  Stops could be set near yesterday’s lows of $7 with a price target at the down-trend line featured on the weekly chart above, currently coming in around $9.

 

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