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Delta Air's Must-Hold Support Level After Earnings Miss

Delta Air Lines missed expectations on earnings and revenue. While the quarter was ugly, the stock is holding up. Where's key support?

Delta Air Lines  (DAL) - Get Delta Air Lines, Inc. Report shares are under pressure, down about 2% after the Atlanta carrier reported its quarterly results.

That is actually decent price action for the stock, considering what the company turned in.

Revenue plunged 76% in the third quarter and Delta reported a loss of $8.47 a share. That was only marginally better than the prior quarter.

The company posted an adjusted loss of $2.3 billion, “although that figure excluded around $4 billion of charges linked to the pandemic.” 

Also concerning is the fact that management said traffic would likely take at least two years to return to prepandemic levels.

Despite the poor results and the bad news, Delta stock isn’t getting crushed. That has my attention.

Trading Delta Stock

Daily chart of Delta stock.

Daily chart of Delta stock.

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Given the current situation, Delta is doing the best it can. But these are some horrendous numbers that no one would have expected a year ago. The fact that Delta stock isn’t near its lows now impresses me somewhat.

Since its collapse in February, Delta has yet to test its 200-day moving average. But it’s maintaining above the 20-day and 50-day moving averages — even after the earnings.

That’s what the bulls need to see going forward. If Delta can stay above the 50-day moving average and uptrend support (blue line), the odds that it will continue to push higher increase.

Admittedly, it doesn’t have an easy road ahead. Resistance near $34.50 to $35 is clear. There the stock finds its 200-day moving average, September highs and the 38.2% retracement.

If we can get a move above this area, though, the shares may begin to take flight. It opens the door to the June highs near $37.50, then the 50% retracement near $40.

On the downside, a daily close below the 50-day moving average would be negative. It opens the door to the 23.6% retracement and September low near $28. A close below that and Delta may fall into no-man’s land, putting $25 on the table.

But let’s not get ahead of ourselves. This is a pretty muted response after earnings — take that for what it is. 

Let’s wait for some confirmation before getting more aggressive with Delta stock. Longs should take notice on a close below the 50-day.