Most of the leading airline stocks fell sharply lower Thursday, likely due to poor earnings from American Airlines (NASDAQ:AAL) and Southwest Airlines (NYSE:LUV). Oddly enough, the airline sector is falling despite lower oil prices, which is a good indication that it 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 chart indications point to a further decline in the near term. Trader 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 Delta at the $39.25 level with a stop-loss below $36 on a weekly chart close. This should present a solid risk/reward trade setup with the upside target being around $47.