United Continental Holdings (UAL), American Airlines Group (AAL) and Southwest Airlines (LUV) have similar-looking charts; unfortunately, they rallied into overhead resistance and have entered a holding pattern before eventually moving lower.
UAL broke down in January, undercutting the 2015 lows, but prices quickly rallied back into resistance in the $55 to $62 area (see the chart above). Prices of UAL got back above the 50-day and 200-day moving averages, but the slopes of these two averages have not turned positive. The On-Balance-Volume (OBV) line came off its January low but has curled over again. Last, momentum is weakening.
AAL has traced out a very similar pattern (see the chart above). In February, the price of AAL dipped to a new low close for the move down. The stock rebounded into overhead chart resistance and has been stalling in the area of the 200-day moving average. The OBV line did pick up, but not in a way to suggest strong accumulation.
Southwest Airlines seems to be flying a similar route. LUV declined for two months before a retracement carried prices back above the 50-day and 200-day averages, but not much more. Chart resistance and dull volume seem to be enough to stall prices here.
Time to take out some flight insurance and raise your sell stops if you are long.