Alaska Air Group Inc. (ALK) stock has recently crossed a significant technical hurdle known as the Death Cross. This ominous indicator occurs when the 50-day simple moving average (SMA) dips below the 200-day SMA, often signaling a potential continuation of a stock’s downward trend. This news comes at a challenging time for Alaska Air, with the stock already experiencing a 7.93% decline year-to-date and a 20.83% drop over the past year.
The Death Cross is a widely recognized bearish signal, and its emergence in Alaska Air’s chart is particularly concerning given the stock’s recent performance. The stock is currently trading at $35.30, well below its 50-day SMA of $38.53 and its 200-day SMA of $38.78. This gap reflects consistent selling pressure and a lack of investor confidence, further compounded by the company’s ongoing challenges.
Alaska Air’s stock struggles aren’t solely attributed to technical signals. The company has been in the headlines for a mix of news that is likely impacting investor sentiment. Recently, Alaska Airlines announced an investment in JetZero, a company developing a new blended-wing body aircraft designed to significantly reduce fuel consumption and emissions by 50%. While this signifies Alaska’s commitment to sustainability, it also signals long-term investments that may not yield immediate returns, potentially contributing to investor hesitancy.
Furthermore, Alaska Air continues to navigate the turbulent regulatory landscape surrounding its proposed merger with Hawaiian Airlines. The Justice Department has extended its review period, leaving the deal, and the uncertainty surrounding it, in limbo. Adding to investor concerns, the National Transportation Safety Board (NTSB) recently criticized Boeing Co (BA), Alaska’s aircraft supplier, for a midair emergency involving a 737 MAX 9. This incident has further heightened safety concerns for investors.
While the technical outlook appears bleak, there are some mixed signals. The stock is currently trading slightly above its 8-day SMA of $34.56, indicating a potential short-term bullish signal. However, this positive signal is overshadowed by the more substantial bearish signals from the 20-day, 50-day, and 200-day SMAs. Investors hoping for a quick turnaround may be disappointed as the Death Cross suggests the downward trend could persist.
Alaska Air is currently facing a perfect storm of technical challenges and news-driven headwinds. The Death Cross doesn’t bode well for the stock’s immediate future, and with ongoing regulatory scrutiny and operational issues, the turbulence might continue. Investors may want to fasten their seatbelts – this ride could get a lot bumpier before it smooths out.
