United Continental Holdings Inc. (UAL) was downgraded today by TheStreet's Quant Ratings service. We had written about UAL earlier this month, and concluded at that time, "The charts of UAL could either bounce or rally or slip lower. The price action and indicators are not easy to read, but weakness below $56.92 should be sold and strength above $61.64 could be bought." So here we are two weeks later with a quantitative downgrade and I would consider that a good reason to review the charts again.
In this updated daily bar chart of UAL, below, we can see that prices are up today but still below the declining 50-day moving average line. The 200-day moving average line is still declining. The volume histogram is neutral and so is the On-Balance-Volume (OBV) line. The Moving Average Convergence Divergence (MACD) oscillator looks like it could be making turn upwards for a cover shorts buy signal.
In this weekly bar chart of UAL, below, we find a bearish setup. Prices are below the declining 40-week moving average line. The weekly OBV line is pointed down and the weekly MACD oscillator is in a bearish mode and not poised for a turn higher. Next chart support on this chart looks like the $50 area.
In this Point and Figure chart of UAL, below, we have a downside price target projected to $53.82.
Bottom line: With most of our indicators bearish or neutral and with a quantitative downgrade to boot, investors and traders should avoid the long side of UAL. Let prices land first.