This morning, most of the leading airline stocks are declining sharply lower. The catalyst for the fall in the airline sector is due to a poor reaction to earnings from American Airlines (NYSE:AAL) and Southwest Airlines (NYSE:LUV). The airline sector is even falling despite lower oil prices so this is a good indication that the sector is headed lower in the near term.
Delta Air lines (NYSE:DAL) is a stock that should be on everyone’s radar. This company reported earnings last week and is now close to retesting its 200-day moving average. All indications on the chart are signaling a further decline in the stock over the near term. Trader and investors should keep an eye on the $39.25 level for a potential downside target. This is also an area where the institutional money will likely support the stock. I would be a buyer of DAL stock at the $39.25 level with a stop-loss below $36.00 on a weekly chart close. This should present a solid risk/reward trade setup with the upside target being around $47.00.
New all-time highs seem almost normal in this market. Countless stocks hit new-all time highs almost every day. This is exactly what has happened with Home Depot Inc (NYSE:HD). Yesterday, Home Depot surged to a all-time high of $154.65. The difference however, was that the stock reversed those gains and closed near the lows of the day. This formed a stock chart candle called a topping tail. topping tails that occur at 52 week or all-time highs are extremely bearish indicators. Technical investors and traders use this signal as a shorting trigger.
The way investors should trade this is simple. Short Home Depot Inc with a downside target of $139.25. However, if the stock every closes above the high of the topping tail of $154.65, stop out immediately. This gives investors tiny risk of less than $1.00 while rewarding investors with possible downside of $15.00. That is a fantastic risk to reward setup.
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Today, two of the leading soft drink companies Dr Pepper Snapple Group Inc.(NYSE:DPS) and PepsiCo Inc.(NYSE:PEP) are declining sharply lower after reporting earnings. Dr Pepper Snapple Group Inc.(NYSE:DPS) is the bigger loser on the session falling by nearly 5.0 percent on the session. PepsiCo stock is down just 0.81 percent at this time.
Traders and investors that are looking to buy Dr Pepper Snapple Group Inc.(NYSE:DPS) stock must now be patient. When a stock declines this sharply from its recent high there is usually more downside over the next few weeks. One level that looks very attractive for Dr Pepper Snapple Group Inc.(NYSE:DPS) stock is the $87.00 area. This looks to be a level where the institutional money has defended the stock in the past and it will likely do it again should DPS stock fall to that support area.