Southwest Airlines Has Filed a New Flight Plan

 | Mar 14, 2017 | 1:09 PM EDT
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At the end of January we looked at Southwest Airlines (LUV)  and the skies were clear. Prices did continue higher in February but March has brought a reversal to the downside. How much more weakness might we see before LUV levels off?

(See Jim Cramer's take on the airlines today here.)

In this daily chart of LUV, below, we can see how prices have pulled back to test and maybe break the rising 50-day moving average line. Volume has increased on this dip and the On-Balance-Volume (OBV) line has turned down signaling more aggressive selling. The trend-following Moving Average Convergence Divergence (MACD) oscillator has crossed with a take profits on long positions signal (a sell from above the zero line).

In this weekly chart, below, we still see a longer bull move but the start of some near-term weakness. LUV is above the rising 40-week moving average line and there is chart support around $50. The weekly OBV line shows a one-week down tick and the MACD oscillator has begun to narrow toward a weekly scale take profits signal.

Bottom line: LUV has made a strong rally since September so a pullback should not be a total surprise. The stock should probably retest the chart support in the $52-$50 area where it stalled in December and January. A close below $50, if it happened, might precipitate further weakness.

Keep checking the departure board and Real Money for the latest updates.

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