Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Chart Of The Day: Delta Divergence As Variant Rises, Stock Falls

By Investing.com (Pinchas Cohen/Investing.com)Stock MarketsAug 24, 2021 09:32AM ET
www.investing.com/analysis/chart-of-the-day-delta-divergence-as-variant-rises-stock-falls-200599806
Chart Of The Day: Delta Divergence As Variant Rises, Stock Falls
By Investing.com (Pinchas Cohen/Investing.com)   |  Aug 24, 2021 09:32AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Since its early-April record peak, when shares of Delta Air Lines (NYSE:DAL) hit a high of over $51, the stock has lost almost a quarter of its value. The Atlanta-based carrier's stock dropped along with demand for its flights as the fourth COVID wave began escalating.

Notwithstanding, the airline's mid-July earnings release showed a strong second quarter, leading some to expect rising demand regardless of the fourth wave. We’re skeptical.

There's no apparent link between a strong second quarter, which took place before the virus reignited, and the reduced level of ticket sales the airline is seeing now. Plus, there isn't any indication on when the fourth wave will end. All of which isn't bullish for Delta shares.

DAL Daily
DAL Daily

DAL has been moving sideways since mid-July, possibly raising the hopes of some for a bottom. However, as the 50 DMA plunged below that of the 200 DMA it created a Death Cross, underscoring recent price weakness. The bearish pattern also suggests a continued downward path.

If the price falls below $27, it will complete a massive H&S top, in place since November.

Trading Strategies

Conservative traders should wait for the price to provide a decisive downside breakout, completing the H&S top, employing both time and price filters to avoid a bear trap. Then, they’d wait for the price to rebound in a return move, to retest the neckline, which will push the price back down, before considering the risk of a short position.

Moderate traders would also wait for the pattern's completion, with a downside penetration, while also employing filters, so as not to be whipsawed. Like their conservative peers, they too might wait for a corrective rally, for a better entry, if not for further confirmation.

Aggressive traders could short upon a close below $37, with the understanding that the price could be wild at that point. They should trade using a plan that accommodates that risk, with a proportionately justifying reward. Here’s an example:

Trade Sample

  • Entry: $37
  • Stop-Loss: $38
  • Risk: $1
  • Target: $32
  • Reward: $5
  • Risk:Reward Ratio: 1:5
Chart Of The Day: Delta Divergence As Variant Rises, Stock Falls
 

Related Articles

Chart Of The Day: Delta Divergence As Variant Rises, Stock Falls

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Optimum integrated Services
Optimum integrated Services Aug 24, 2021 1:46PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
JiiFII MIXER
JiiFII MIXER Aug 24, 2021 10:56AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
nich
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email