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Delta Air Earnings Preview: Can the Shares Take Flight?

Delta Air Lines stock is up on the year but lags the major indexes. Will that change when it reports earnings? Let's look at the chart.

It has not been an easy time for the airlines, including Delta Air Lines  (DAL) - Get Delta Air Lines, Inc. Report.

The stock is up 8.5% on the year. Of the major airlines, this is one of the weakest performers, barely nudging out Spirit Airlines' 6% gain.

The news from Southwest Airlines  (LUV) - Get Southwest Airlines Co. Report doesn’t seem to be helping sentiment, as that carrier slogs through several thousand canceled flights.

That’s even as Southwest’s operations are expected to return to normal by Wednesday. It’s even as Delta raised its earnings forecast on the back of strong ticket sales.

Now the Atlanta airline will kick off earnings season on Wednesday morning, alongside JPMorgan Chase  (JPM) - Get JPMorgan Chase & Co. (JPM) Report.

I assessed JPMorgan ahead of earnings. Now it’s time to look at Delta Air’s chart.

Trading Delta Air Lines Stock

Daily chart of Delta stock.

Daily chart of Delta stock.

The chart shows the stock’s strong rebound from the 2020 low, but it also shows the trouble Delta Air has had gaining traction since its highs earlier this year.

The stock leaped in February, climbing from the key $37.50 area all the way to $50 before the end of the month.

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While Delta had two solid pushes above $50 — once in March and once in April — the stock ultimately failed near this area.

After some volatile back-and-forth action, the 200-week moving average acted as resistance and we ultimately saw Delta stock slip back to the $37.50 area.

With the stock midway between both support and resistance, Delta's chart is in no man’s land right now.

On the upside, a push through the 200-day moving average puts $45 in play, followed by this month’s high up at $46.

Above $46 and the 200-week moving average is on the table. If the shares can take flight and clear this level of resistance, $48.50 is in play, followed by the $50 to $52 resistance zone.

On the downside, a move below $41.50 puts the 50-day moving average in play. Below that and $40 is on the table.

Should Delta stock ultimately drop below $40, it likely opens the door to the $37.50 level. 

I like buying Delta on a dip down to this zone, particularly with the increased guidance and return to flying.

But should it lose $37.50, Delta becomes a risk-off situation.