American Airlines Group Nose Dives

Yesterday, we looked at a 10-Month SMA Chart of Advanced Auto Parts Inc. and noted that it was showing a ‘sell’ signal after its monthly price is trading below the 10-Month SMA.

Today’s Chart of the Day is a 10-Month Simple Moving Average Chart for American Airlines Group Inc. (NYSE: AAL).

American Airlines Group Inc., through its subsidiaries, operates as a network air carrier. It provides scheduled air transportation services for passengers and cargo. As of December 31, 2019, the company operated a mainline fleet of 942 aircraft. It serves 365 destinations in approximately 61 countries, principally from its hubs and gateways.

Now, below is a 10-Month Simple Moving Average Chart for American Airlines Group Inc.

Back in April 2018, the AAL 1-Month Price crossed below the 10-Month simple moving-average (SMA) indicating AAL is on a PowerTrend ‘Sell’ signal (circled).

American Airlines Nose Dive

Prices fell steadily and then…

You can see where prices plummeted recently, since the very function planes exist to serve has been suspended by the CDC’s advice about containing the coronavirus. (This is a good example of fundamental analysis being confirmed by technical analysis.)

Since the PowerTrend ‘sell’ signal occurred for the stock back in April 2018, when the stock was around $43.40, AAL shares have gone on to see a drop of 63.3%.

Now, as you can see, the 1-Month moving-average is still below the 10-Month SMA. That means the bearish trend is still in play!

This bearish price trend makes AAL a good candidate for a put option purchase.

As long as the 1-Month Price remains below the 10-Month SMA, the stock is more likely to keep trading at new lows in the coming days and weeks.

We’ll be keeping our eye on this stock as it continues to trend downward so we’ll know the moment the market conditions shift and the stock offers a prime buying opportunity in a bearish market.

Best Regards,

Chuck Hughes
Editor, Chart Of The Day

 

ActionTicker SymbolNameAction Description
Buy to openALXN200417P00100000Alexion Pharmaceuticals, Inc. (NYSE: ALXN) April 17, 2020, $100 put optionsBuy to open ALXN April 17, 2020, $100 put options at $21.10.
Buy to openMRTX200417P00090000Mirati Therapeutics, Inc. (NYSE: MRTX) April 17, 2020, $160 put optionsBuy to open MMM April 17, 2020, $160 put options at $29.18 per contract.
Sell to openMRTX200417P000800003M Co. (NYSE: MMM) April 17, 2020, $145 put optionsSell to open MMM April 17, 2020, $145 put options at $18.08 per contract.
Chuck Hughes

Written By Chuck Hughes

Before Chuck Hughes won 10 Trading Championships, he was an accomplished Air Force pilot. In fact, he credits his success as a stock and options trader to his disciplined upbringing and career. When he was deciding between a career in the Navy and a career in the Air Force, the Navy told him he’d only have a 33% chance of flying jets. The Air Force gave him 100%. He liked those odds better. 35 years ago, Chuck had a wife, a young daughter, a son on the way, and a huge mortgage to afford. He didn’t want to give up on his lifelong dream and stop flying for a major commercial airline. He knew he needed to supplement his income during the 15 days a month he wasn’t flying. So he used his experience in discipline and math, and his understanding of finance and the stock markets (which he’d always been interested in,) and opened a $4,600 trading account. He made over $460,000 in profits his first two years of trading, and he hasn’t looked back since. When he was diagnosed with Meniere’s disease 15 years later, which commonly leads to vertigo…He knew his career as a pilot wouldn’t last much longer with those odds. But he didn’t have to scurry to find another gig, or panic about how his family would eat… He’d spent the last 15 years perfecting his system and raking in cash. As an options trader, Chuck does not let his emotions get in the way of his trading strategy. He adheres to disciplined and methodical options and stock trades. Because he respects the options game so highly, and understands the true freedom that financial solvency can bring, Chuck was able to design and refine his system and win those 10 Trading Championships. Put simply, Chuck Hughes’ trading strategies work, and in all types of market conditions. They’ve worked throughout the bull, bear, and flat markets America has seen in the last 30 years. Chuck Hughes has spent that time building a reputation as one of the most trustworthy options traders in the industry. His publishing group Legacy Publishing LLC was one of the few trading groups on the planet to have correctly predicted and profited from the 2008 financial crash .As a published author 16 times over, a 10-time Trading Championship winner, and an options-trading teacher for 25 years, he’s learned to trade and teach without an ego.