September 14, 2011 at 01:00 AM EDT
Delta Should Keep Flying Higher
After a tough 2011, Delta Air Lines (NYSE:DAL) is taking off again.

Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.

Delta Air Lines (NYSE:DAL) — US Airways Group (NYSE:LCC) led an industry-wide rally on Tuesday after executives said they have not yet seen any signs of a contracting economy in their September bookings and stated plans to reduce their seat capacity. Shares of airline stocks have been under severe pressure so far in 2011, and the Guggenheim Airline ETF (NYSE:FAA) is down almost 30% year to date.

Out of the group, the stock that caught my attention yesterday was Delta. The weekly chart turned down in January after the stock broke the uptrend dating back to early 2009, and has been trending down ever since. 

DAL Weekly Chart

The daily chart of DAL shows a wedge that yesterday resolved to the upside, and by doing so, the stock also broke back on top of its 50-day simple moving average (blue line).

DAL Daily Chart

Keeping in mind the high correlation among stocks and the broader market downtrend, Delta does offer a decent long-side entry here. Stops could be set near yesterday’s low of $7 with a price target at the downtrend line featured on the weekly chart above, currently coming in around $9.


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