Turbulence continues to shake the airline sector, and two major players, Delta Air Lines (DAL) and United Airlines (UAL), are facing headwinds. Both airlines have recently formed a Death Cross on their stock charts, a bearish technical pattern that often signals potential trouble ahead for investors.
The Death Cross occurs when a stock’s short-term moving average crosses below its long-term moving average. This pattern is generally seen as a warning that the stock might experience further declines. Both Delta and United are now displaying this ominous formation, raising concerns about their future stock performance.
Delta Air Lines: A Cloudy Outlook
Delta’s stock has experienced recent volatility. While the stock is up 4.7% year-to-date, it’s down 2.04% over the past year. The airline has been grappling with the aftermath of a significant IT outage in July, which led to the cancellation of over 7,000 flights and resulted in a $380 million hit to its direct revenue.
Delta’s stock price currently sits below its 50-day and 200-day moving averages. This, combined with the Death Cross formation, suggests a potential for further downside risk. While short-term indicators still show some buying pressure, the long-term averages are pointing towards potential declines, creating a mixed technical picture.
United Airlines: Facing Rough Air
United Airlines has also formed a Death Cross, adding to the airline sector’s woes. Despite a year-to-date gain of 7.00%, the stock is down 13.03% over the past year. United has faced recent challenges, including turbulence-related injuries and a labor dispute with the Teamsters union.
Similar to Delta, United’s technical indicators are sending mixed signals. Short-term moving averages are bullish, but longer-term averages are bearish, reinforcing the concern of a Death Cross.
The Bigger Picture: What to Watch
Investors should remain vigilant about broader market conditions and company-specific news. For Delta, resolving its IT issues and managing the associated financial impacts will be crucial. For United, successfully navigating labor disputes and operational challenges could be pivotal.
With the airline sector facing multiple headwinds, the current technical formations for both Delta and United suggest caution. While short-term buying signals might offer temporary relief, the long-term outlook remains uncertain, reflecting broader market volatility and specific operational hurdles for these major carriers.
