Southwest Airlines: LUV Is in the Air

 | May 16, 2017 | 3:51 PM EDT
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Southwest Airlines (LUV) looks like it is tracing out a large bullish triangle formation since January. There are higher lows in January and March and equal highs at the end of February and May, which is what you want to see in an ascending triangle formation.  Action Alerts PLUS holding LUV is above the popular moving averages and there appears to be strong accumulation since August.

Let's check the indicators and charts and see what kind of flight plan we can file. The last time we looked at LUV was April 28 when we concluded, "With LUV in the middle of an $8 range we could go either way. A close below $52 would be bearish. A close above $60 would be bullish. Keep checking the departure boards for the latest updates."

In this updated daily bar chart of LUV, above, we can see that prices moved higher since our last review. Prices are close now to an upside breakout from this pattern. LUV is above the flat 50-day moving average line and above the strongly rising 200-day moving average.

The daily On-Balance-Volume (OBV) line has moved up with prices since August and like prices it is close to making a new high. The Moving Average Convergence Divergence (MACD) oscillator is in a bullish configuration but needs price gains from here to avoid a crossover.

In this weekly chart of LUV you can see the long consolidation pattern and the breakout above $50. The current sideways/triangle pattern is visible, too. The weekly OBV line has been rising and is supportive of the advance. The weekly MACD oscillator is in a bullish mode above the zero line and poised for a fresh upside crossover and buy signal.

In this Point and Figure chart of LUV, above, we can see a breakout at $51 and we can also see that a trade at $60 will be another breakout. Using this chart of price targets we can project an $82 price target.

Bottom line: First class or coach you want to go long on strength above $60 and then risk a close below $55 looking for gains in the low $80s.

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