For his "Executive Decision" segment on "Mad Money" on Wednesday, our own Jim Cramer sat down with Oscar Munoz, CEO of United Continental Holdings Inc. (UAL) . The stock price of this airline has been doing well since its July low, but are there "technical headwinds" ahead and what do the charts and indicators suggest about the flight plan? Let's check out the patterns.
In this daily bar chart of UAL, below, we can see that prices have gained from the November low and the July turn was just an extension of those gains. Prices are trading above the positively sloped 50-day moving average line as well as the bullish 200-day line. The volume pattern does not look bullish, but the daily On-Balance-Volume (OBV) line shows a positive trend for the past 12 months. A rising OBV line is a sign of aggressive buying. In the bottom panel of this first chart we can see that the trend-following Moving Average Convergence Divergence (MACD) oscillator has rolled over to a take-profits sell signal.
In this weekly bar chart of UAL, below, we can see a longer-term uptrend from the middle of 2016. Prices are now above the rising 40-week moving average line. The weekly OBV line has risen the past five months but it has not made a new high to confirm the price gains above the 2017 highs. The weekly MACD oscillator is bullish but it has begun to narrow, suggesting a weakening of the trend.
In this Point and Figure chart of UAL, below, we can see an upside price target of $107 being projected.
Bottom line strategy: The lack of strong volume and the slowing of the uptrend suggest that UAL could trade sideways or even dip a little in the short term. A dip into the $85-$80 area could be a buying opportunity, but weakness under $80 would not be good for the charts.