American Airlines Group Inc., through its subsidiaries, operates as a network air carrier. It provides scheduled air transportation services for passengers and cargo. As of December 31, 2016, the company operated a mainline fleet of 930 aircraft.
Take a look at the 1-year chart of American (NASDAQ: AAL) below with added notations:
AAL had been in an overall uptrend until December. However, the stock eventually stalled, as AAL repeatedly hit the same resistance at $50 (red). Now, 4 months later, the stock is sitting back at that level. A solid close above the $50 should lead to another leg higher for AAL.
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The Tale of the Tape: AAL has a 52-week resistance at $50. The possible long position on the stock would be on a breakout above that level with a stop placed under it.
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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach