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TheStreet Open House

4 Hot Stocks to Trade (or Not)

Stock quotes in this article: BBRY, FTR, LCC, ARR

US Airways

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Nearest Resistance: $14
Nearest Support: $13
Catalyst: American Airlines Merger

>>4 Loser Stocks Poised for a Comeback in 2013

It's been a stellar year for US Airways (LCC). Shares of the legacy carrier have climbed by more than 50% in the last 12 months, buoyed by newfound strength in the airline business. But that trajectory is getting threatened today after the firm announced a merger with bankrupt AMR (AAMRQ), the parent company of American Airlines.

The move is a coup for AMR shareholders who didn't expect much of a stake post-bankruptcy, sending shares up more than 44% today. But LCC is selling off around 7% as investors worry about their minority position in the combined firm, which will fly the new American Airlines colors on its fleet.

From a technical perspective, LCC is the more interesting of the pair. Shares had been consolidating after rallying hard for the last six months. But now a breakdown below former support at $14 is sending a sell signal for this stock. Despite the potential benefits from the merger, US Airways shareholders looking for an exit should pull the life jackets from under their seats and exit this plane now.

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