Here’s a preview of what I’ll be discussing on Talking Numbers today between 3:20 and 3:30 pm EST on CNBC:
The airlines have been one of the best performing sectors in the market this year. It’s one of the few sectors that I’ve liked from both a fundamental and technical perspective for the past 3 months (see here), though I’ve had essentially no position in that time, so poor job by me.
In any case, what to make of DAL today? On a fundamental basis, it’s still a relative bargain in this market, at 7x projected 2013 earnings. Airlines also have the potential tailwind of lower oil prices this year, which I expect, since oil inventories are near all-time highs and emerging market growth is weaker than it has been in years.
On a technical basis, DAL looks strong as well. First chart is a longer-term 5 year chart showing the important breakout above $15 resistance earlier this year. That level was multiyear resistance, and I expect it to act as support going forward:
The second chart is a 1 year chart showing the importance of the 50 day moving average. No need to make this more complicated – the 50 day ma is trending support, now around the $16.75-$17 area. This is a strong uptrend that also experienced a long-term breakout. I would get interested in a swing trade on the long side if it retraced to that area.