The decline leaves shares teetering on support, with many investors wondering if a rebound is about to ensue or if more declines are on the way. A stronger report would have helped the case for the former, but if bulls can defend $51, Delta stock may be able to carry higher in the fourth quarter.
Earnings of $2.32 per share beat estimates by 5 cents, while revenue of $12.55 billion came up short of estimates by $60 million despite growing 6.5% year-over-year. The so-so quarter may have been overlooked by investors, had guidance come in stronger.
Management expects fourth-quarter earnings of $1.20 to $1.50 per share, with the range missing consensus expectations of $1.51 per share.
That's not sitting well with Wall Street, as Delta shares sink even in the face of a significant rally in the broader market. It's weighing on its peers, too, as Southwest Airlines (LUV - Get Report) and American Airlines (AAL) are underperforming the stock market as well.
Let's look at the charts more closely.
Trading Delta Stock
A look at the daily chart above emphasizes just how important the $51 level has been so far this year. Previously serving as resistance throughout the first quarter, this level turned into support in late May and early June. It's also worth noting that at ~$51, Delta yields 3% with its dividend.
After hitting a low of $51.07 in Thursday's session, this level is again acting as support. It's encouraging to see DAL stock trade down to support and bounce higher. It would be even more encouraging to see shares reclaim the 38.2% retracement.
On a further rally, let's see if Delta stock can fill its earnings gap back up toward $54.40. That's also where the 50-week moving average currently sits, as shown on the weekly chart above. North of $54.40 and reclaiming the 200-day moving average isn't out of the question, either.
A look at the weekly chart above highlights the upward channel (blue lines) that Delta has been trading in for about three years. Should it lose the $51 level that we talked about on the daily chart, it will also break below channel support on the weekly chart.
In that event, look for a drop down to the 200-week moving average currently at $48.35. This metric is not tested often, but when it is, it's generally solid support. Below that and $46 is on the table.
The bottom line: Above $51 and Delta stock remains OK. Below is more bearish.