Bearish Doubling Down For Delta Airlines

Published April 26, 2017
11:10 PM

On April 26, 2017, Delta Airlines (DAL) crossed below its 150 day moving average (DMA). Historically this has occurred 41 times and the stock drops a minimum of 0.194%. It has a median loss of 6.485 % and maximum loss of 40.441% over the next 15 trading days.


When we take a look at other technical indicators, the relative strength index (RSI) is at 52.8562. RSI tends to determine trends, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. The current reading declares the stock recently moved up into a more neutral movement state.

The true strength index (TSI) is currently -17.9842. The TSI determines overbought/oversold levels and/or current trend. I solely use this as an indicator of trend as overbought and oversold levels vary. The TSI is double smoothed in its calculation and is a great indicator of upward and downward movement. The current reading declares the stock is moving down.

The positive vortex indicator (VI) is at 1.0188 and the negative is at 0.8566. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. The current reading declares the stock is moving up, but the positive is dropping and negative is rising after today's session.

The stochastic oscillator K value is 71.7501 and D value is 61.2473. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the stock is trending up. When the D value is higher that the K value the stock is trending down. The current reading declares the stock is approaching overbought territory and should cycle down soon.

Considering the moving average crossover, RSI, TSI, VI and stochastic levels, the overall direction appears to continue heading down. Based on historical movement compared to current levels and the current position, the stock could drop another 3.82% over the next 15 trading days.

Just two days prior to our current downward DMA cross, Delta crossed over its 150 DMA. When the downward cross occurs a few trading days after an upward cross, the stock always drops. Since the end of the financial crisis in 2009 this has occurred in January 2011, October 2011, December 2011 (3 times), October 2012 (4 times), November 2012, July 2015, and April 2016. The stock dropped 6.369%, 12.993%, 5.483%, 3.879%, 2.317%, 3.535%, 4.814%, 5.100%, 5.572%, 3.560%, 1.261%, and 13.494% respectively. The median drop of these 12 occasions is 4.957%.

DISCLOSURE: I currently do not have positions in the stock mentioned above. I may enter a position within the next 24 hours. Historical movements and technical indicators should never be the sole basis for entering positions involving risk. Make sure appropriate research is conducted prior to taking any risk in a marketplace.

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