American Airlines (AAL) is a great turnaround story, but we are more concerned about the current flight plan.
Get your boarding pass, try to get an upgrade and then look at the charts and indicators below.
In this daily bar chart, above, we see AAL rebounded quickly from a low in June. Prices climbed higher and reached a peak in early December. From that late 2016 zenith, the price of AAL has made lower lows and lower highs. Prices are now below the declining 50-day moving average line. AAL is still above the rising 200-day moving average line. The On-Balance-Volume (OBV) line shows some brief periods of strength but not all that much to instill confidence in the rally. The 12-day momentum study shows a bearish divergence back in November, December and January -- with hindsight, that foreshadowed the current bout of softness.
This weekly chart of AAL, above, is not inspiring. Yes, prices are above the rising 40-week moving average line, but overall the past three years you would could not profit from a buy-and-hold strategy. The weekly OBV line turned up in June, which was a good confirming signal, but it has flattened out the past four months. The weekly Moving Average Convergence Divergence (MACD) oscillator crossed to the downside above the zero line, giving a liquidate-longs sell signal. Just a long-winded way of saying you should take profits.
Bottom line: AAL could correct further toward support around $40. It is unclear how long AAL might stay in this corrective mode, but for now I find no pressing need to position AAL from the long side.