I realize it doesn't sound like that much of a stretch to call an airline stock toxic. But discount European carrier Ryanair Holdings (RYAAY) is just now starting to show some technical weakness. Investors could get their first distinct sell (or short) signal in Ryanair this week.
Like BHP Billiton, Ryanair has been a strong performer for the last couple quarters - shares of the $11 billion carrier have climbed by more than 32% in those last six months. But Ryanair is showing weakness thanks to a rounding top in shares. Like the name implies, a rounding top looks like an upside down parabola in a stock's price action. It represents a gradual shift of power from buyers to sellers. In Ryanair's case, the pattern triggers on a move down through $38.
Momentum is important on this stock as well: RSI had show RYAAY in overbought territory as the calendar flipped over to 2013. Contrary to popular belief, an overbought reading in momentum isn't a bearish signal in and of itself (overbought stocks statistically tend to go even more overbought in the short-term), but the fact that momentum is rolling over simultaneously is bearish. I'd be looking to take gains on a slip below $38.
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