Delta continues to underperform the broader market by a wide margin. The stock is still down more than 60% from its 2020 high and is up “just” 23.5% from the March lows. While a rally of more than 20% from a stock’s low is generally viewed positively, consider that the rally lags that of the broader market, which is still up around 27% from the lows.
So not only has Delta fallen almost twice as hard, but it’s rebounded less than the overall market thus far. Those are hallmark signs of a weak stock and it’s not a promising sign coming into the company’s quarterly results, which are due up before the open on Wednesday.
On the plus side, Delta’s outperforming most of its peers, including American Airlines (AAL) - Get Report, United Airlines (UAL) - Get Report and Spirit Airlines (SAVE) - Get Report. The group needs federal aid as it struggles in an environment plagued by the coronavirus.
Let’s look at the charts of Delta Air Lines to see if we can get an idea of the stock's key technical areas once the quarterly numbers are out.
Trading Delta Stock
In mid-March, Delta stock bottomed below $20, ripping higher and rallying to $35 in just a few days. The stock has cooled off quite a bit since then, pulling back into the low-$20s. While the volatility has been enough to make investors sick, there are a few observations from the action above.
Remember, a That may not remain the case though should Delta issue a drastically disappointing quarterly update on Wednesday.First, the stock has put in a higher low after pulling back in early April. Second, support seems to be coming into play, with buyers thus far willing to step in and buy the stock near $22. That may not remain the case though should Delta issue a drastically disappointing quarterly update on Wednesday.
If that’s the case and Delta stock breaks below $22, it puts the $20 mark and the March lows in play at $19.10. That could send shares down into the teens as Delta probes for a new low. It would be ugly action at this stage, but remember, a bottom takes time to form.
On the upside, there are also a few key observations as well. For instance, the stock has been unable to reclaim downtrend resistance (blue line) as well as the declining 20-day moving average.
Those levels are squeezing Delta stock down into support. If resistance is the mark that gives way - not support - then investors could see a quick move higher. In that instance, look for a rebound to $30, where shares will hit the 23.6% retracement of the 2020 decline. Above that puts the 38.2% retracement and April high in play near $35.