United Airlines Stock Will Struggle Until This Happens: Chart

The divergent action in the transport index continues Wednesday. While FedEx (FDX) and UPS (UPS) move to new August highs this week, shares of United Airlines   (UAL) , (AAL) and (DAL) remain weak. UAL, in particular, appears to be in a steady descent and will likely fade further in the near term. Remaining patient when it comes to UAL should prove to be a good strategy.

UAL was holding up quite nicely earlier this summer. The stock reached new all-time highs as June began and remained very close to the peak for the next six weeks. This changed dramatically following a July 19 post-earnings breakdown. UAL fell nearly 6% that day, its biggest loss in more than a year, on extremely heavy trade. This major breakdown blew out a major support zone near $77.00. Since then, numerous other key support areas have failed as well as investors headed for the sidelines.

Last week the stock reached fresh 2017 lows after taking out the March low. The overhead supply now in place is immense and will likely keep shares in check for some time to come. As this plays out, and the stock continues to drift lower, patient investors should keep a close eye on the $56.00 area. This major support zone includes the October 2016 highs as well as the 40-week moving average.

UAL will enter deeply oversold territory as this area comes into play and will become a very low-risk buy. Until then, this major airliner will likely remain in a frustrating flight pattern.

View chart in a new Window

More of What's Trending on TheStreet:

Long FDX

More from Stocks

Dow Slips, S&P 500 and Nasdaq Rise Ahead of Alphabet Earnings

Dow Slips, S&P 500 and Nasdaq Rise Ahead of Alphabet Earnings

Fiat's Management Change Presents a Buying Opportunity, Analysts Say

Fiat's Management Change Presents a Buying Opportunity, Analysts Say

Full Blown Trade War With China Will Pound S&P 500 Profits: Goldman Sachs

Full Blown Trade War With China Will Pound S&P 500 Profits: Goldman Sachs

Watch Tesla's Battered Bonds as Musk Goes Begging Suppliers for Cash

Watch Tesla's Battered Bonds as Musk Goes Begging Suppliers for Cash

Video: Here Is How Tech Earnings Could Affect the Broader Stock Market

Video: Here Is How Tech Earnings Could Affect the Broader Stock Market