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How to Trade Delta Air Lines After Earnings Report

Delta Air Lines is set report earnings on Thursday. Here's what the charts look like ahead of the results and how to trade the stock afterward.

The airlines will be glad to put 2020 behind them, and Delta Air Lines  (DAL) - Get Delta Air Lines Inc. Report will look to do so Thursday morning.

That’s when the Atlanta carrier will report its fourth-quarter results ahead of the open.

But that’s not to say that the forward year or years will be easy. Management at Delta and others in the space have already predicted a multiyear turnaround will be needed to return to precoronavirus operations.

Delta stock is about flat so far this year, but the stock remains lower by 32% over the past year and about 35% from its high.

On both performance measures, Delta lags just Southwest Airlines  (LUV) - Get Southwest Airlines Company Report, a leader among the major airlines and considered by many to have the highest-quality financials in the industry.

American Airlines  (AAL) - Get American Airlines Group Inc. Report, United Airlines  (UAL) - Get United Airlines Holdings Inc. Report and Spirit Airlines  (SAVE) - Get Spirit Airlines Inc. Report all lag Delta and Southwest. Can Delta maintain its leadership after earnings?

Trading Delta Stock

Daily chart of Delta stock.

Daily chart of Delta stock.

When we look through the market, so many areas are euphoric. Thankfully, Delta and its peers seem to be one place where the stocks aren't being bid undeservingly higher.

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That said, I could see a major upside squeeze in these names at some point this year as the travel trade gains momentum and as covid-19 vaccines continue to make the rounds.

While most of the market bottomed in March, Delta stock did so in May. 

The shares rose sharply and were met by the 100-day moving average. At the time, it was resistance. In September and November, this measure was support.

Should Delta stock break below the 50-day moving average when it reports earnings, look for the 100-day moving average to again act as support. 

It will also have the pivotal $35 area nearby, as well as the 38.2% retracement.

The shares have been chopping sideways for almost a month now. If the reaction is bullish, look for a retest of the December highs above $43.50.

Above that and the $45 to $45.50 area is in play. There, Delta stock will find the 100-week moving average and the 61.8% retracement.

Should the shares climb above that, either slowly or quickly, the 200-week moving average could be in play, followed eventually by the 78.6% retracement.