American Airlines Group Inc (NASDAQ: AAL)

American Airlines Group Inc., through its subsidiaries, operates in the airline industry. As of December 31, 2014, the company operated 983 mainline jets, as well as 566 regional aircrafts through regional airline subsidiaries and third-party regional carriers. It serves 339 destinations in 54 countries. The company was formerly known as AMR Corporation and changed its name to American Airlines Group Inc. in December 2013.

Take a look at the 1-year chart of Norfolk (NASDAQ: AAL) below with my added notations:

1-year chart of Norfolk (NASDAQ: AAL)

1-year chart of Norfolk (NASDAQ: AAL)

AAL went into a 5-month decline staring in March. However, during the last 3 months of the decline, and beginning of the rally, AAL created a clear level of resistance at $44 (green), which had also been support prior. A break above that $44 level should mean higher prices for the stock, and last week AAL broke that resistance.

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The Tale of the Tape: AAL broke through its key level of resistance at $44. A long trade could be entered on a pull back down to that level. However, a break back below $44 could negate the forecast for a higher move and would be an opportunity to get short the stock.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach