Is American Airlines Headed for a Breakout?

NASDAQ: AAL | American Airlines Group, Inc. News, Ratings, and Charts

AAL – A resistance lines has formed in the chart of American Airlines Group (AAL). If the stock breaks through, a breakout is expected. Read more to learn how to profit from this trade.

American Airlines Group (AAL) is the world’s largest airline by scheduled revenue passenger miles. The firm’s major hubs include Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington, D.C. After completing a major fleet renewal, the company has the youngest fleet of U.S. legacy carriers.

The company has benefited with an improvement in air-travel demand in the United States. Delta cases of COVID-19 are falling, which helped the company see a 20% sequential improvement in third-quarter 2021 passenger revenues. AAL expects strong air-travel demand during the holidays in the fourth quarter.

As of the end of the third quarter, the company had $14.5 billion in cash compared to $2.6 billion in short-term debt. Over the past three years, AAL revenues have fallen an average of 17.6% per year. However, analysts expect sales to rise 125.8% year over year in the current quarter. This has led to a Growth Grade of B in our POWR Ratings system.

The stock appears very overvalued with a forward P/E over 1,000. AAL has shown mixed performance since July, but has been trending up since the end of October. This is evident in the chart below.

Take a look at the 1-year chart of AAL below with my added notations:

Chart of AAL provided by TradingView

During the past several months, AAL has formed an important level of resistance at the $22 (red) mark. The stock has tested that area multiple times since the beginning of June and is currently sitting right under that level again. A solid close above $22 should lead to higher prices for AAL.

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A solid close above $22 should lead to higher prices for AAL. A long trade could be entered on a breakthrough of that level.

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AAL shares rose $0.49 (+2.25%) in premarket trading Monday. Year-to-date, AAL has gained 41.47%, versus a 26.80% rise in the benchmark S&P 500 index during the same period.


About the Author: Christian Tharp


I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing. More...


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