Time for American Airlines (AAL) Stock to Land?
American Airlines Group (AAL) stock has been on the rise since its last earnings report on October 25th. The company beat earnings estimates slightly at that time. But what has been helping boost American Airlines and other key airline and transportation stocks has been the declining cost of fuel, in line with the recent plunge in crude oil prices. Crude oil futures have been plummeting sharply since the early October peak, and U.S. crude oil (West Texas Intermediate) has fallen by more than 30% within the past two months.
This situation could change next month, though, as there are expectations that OPEC (Organization of the Petroleum Exporting Countries) may decide to cut its output when it meets in December to help deal with the current oversupply situation. (See also: Time to Ease Back into Crude Oil Stocks and ETFs?)
In the meantime, American and other airline stocks are looking heavily overbought and due for another leg down within the prevailing downtrend on multiple time frames. AAL has just reached the top of its 200-day descending linear regression channel and the upper Bollinger Band. Additionally, momentum oscillators are beginning to turn down from overbought. With crude oil prices appearing to bottom and the OPEC meeting on the horizon, airline stocks are potentially topping out. Overall, the technicals are signaling a clear bearish bias for AAL.
The Technicals Rating
The Technicals gives AAL a bearish rating of 4 (on a scale of 1-10, with ’10’ being the most bullish and ‘1’ being the most bearish). Below are some of the key technicals for AAL, as well as other relevant information, that paint a moderately bearish picture of the stock:
- Price Position vs 200-Day SMA: -8.77% (below) – BEARISH
- Position vs 50-Day SMA: +5.84% (above) – BULLISH
- Position vs 20-Day SMA: +4.25% (above) – BULLISH
- 200-Day Trend Slope (Linear Regression): BEARISH
- 100-Day Trend Slope (Linear Regression): BEARISH
- Stochastics (14,3,3) Level: Turning Down in Overbought – BEARISH
- RSI (14) Level: Turning Down near Overbought – BEARISH
- Position in Bollinger Bands: Near Upper Band – BEARISH
- Sector (ETF: JETS) Long-Term 200-Day Trend: BEARISH
- Sector (ETF: JETS) Medium-Term 100-Day Trend: BEARISH
- Market (S&P 500) Long-Term 200-Day Trend: BULLISH
- Market (S&P 500) Medium-Term 100-Day Trend: BEARISH
- Short Interest Ratio: 7.30% – BEARISH
- Analysts’ Mean Target Price: $47.22 (far above current price) – BULLISH
- Last Earnings Reaction: Move Up – BULLISH
Overall The Technicals Rating for AAL: TTTTTTTTTT (4 out of 10) – MODERATELY BEARISH
IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Past performance is not indicative of future results. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Chief Market Strategist at The Technicals
With more than two decades of experience as an equity analyst for several major research firms, Don has covered individual stocks (both technically and fundamentally) across a wide variety of sectors and industries, including tech, financial, and retail. He has been quoted regularly in key financial media like Bloomberg and Reuters. Contact Don