American Airlines Group, Inc EEL slipped about 2.5% lower on Thursday despite the pressure a profit hit in the third quarter.
For the third quarter, American Airlines reported revenue of $13.46 billion, beating the consensus estimate of $13.25 billion. The company reported earnings per share of 69 cents, beating a consensus estimate of 31 cents. Revenue increased 50.1% year over year.
Although general markets were slightly higher during the day, American Airlines was unable to break Wednesday’s intraday high, resulting in selling pressure. If the stock sustains above $13.30, the recent downturn could be part of American Airlines working to print a bull flag pattern.
The bull flag pattern is created with a sharp rise to the upside that forms the pole, which is then followed by a consolidation pattern that takes the stock down between a parallel line channel or into a narrowing triangle pattern.
For bearish traders, the “trend is your friend” (until it isn’t) and the stock can continue lower within the following channel for a short time. Aggressive traders may choose to sell the stock at the upper trendline and exit the trade at the lower trendline.
- Bullish traders should watch for a breakout from the upper descending trend line of the flag pattern on high volume to enter. When a stock breaks out of a bullish flag pattern, the upward movement measured is the length of the bar and should be added to the lowest price within the flag.
- A bull flag is negated when a stock closes a trading day below the lower trendline of the flag pattern or when the flag falls more than 50% down the pole.
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The American Airlines card: American Airlines reversed an uptrend on Oct. 12, up almost 20% between that date and Wednesday when the stock touched $14.28. The surge, coupled with Thursday’s drop, could…
