American Airlines (AAL) replaced Con-way (CNW) in the Dow Jones Transportation Average, last week. Positive looking charts for AAL should help give some lift to the second part of Dow Theory.
Earlier this year, AAL was stuck in roughly a $10 trading range between around $46 to $56. Prices broke down in May, but a new uptrend has just been established. We now have a low in August and a higher low in October, along with higher highs for AAL in September and October.
AAL has rallied above the 50-day moving average and is poised to break above the 40-week moving average in the chart, above. If we don't get any cancelled flights, we could see AAL rally back into overhead resistance in the $50 to $55 area.