It’s always interesting and useful from a vpa perspective to review older posts and one such is Alaska Air Group ALK which I considered on the 13th March 2019 and the following is the summary from that analysis.
The outlook here could best be described as ominous. Bearish price sentiment has now taken hold as we move away from the volume point of control at $65 and the extended congestion phase of the last 12 months. Below, there is very little to provide any support, and with a low volume node in the $50 region, expect to see the price move swiftly through this area and down towards the $45 region where some potential price support awaits. Note the potential price support levels of red and blue dotted lines on the accumulation and distribution indicator are mild, and therefore offering little in the way of meaningful support. If these are breached, we may see a very deep move to even lower levels at $32 in the longer term. So a rocky ride in prospect for this stock lower in the longer term.
So what happened?
The stock broke lower and with momentum into a dramatic and volatile price waterfall early in 2020, before finding a bottom at $20.02 per share, so deeper than I had anticipated and also aided by the virus. Nevertheless a healthy profit for the shorts whether selling the stock itself or buying put options. After such a dramatic fall, and as expected, what followed was the accumulation phase which builds in congestion leading to the subsequent rally and which has returned this stock to the highs of 2019 on a steadily upwards trend. The all-time high of $101.43 is a long way off, and the level at $75 per share is one that has caused the share price to reverse and may do so again as we build into a congestion phase again on the weekly chart. The most recent earnings report came last week at ($3.51) against a forecast of ($3.63) so marginally better than expected, with revenue of $797 million against an estimate of $786.52 million.
From a technical perspective note the strong price-based support at just above $65 per share and denoted with the red dashed line of the accumulation and distribution indicator. This is a level that has been tested and held 6 times in the past with the blue dashed line below ( 4 times tested ) adding further support and both these levels have been tested in the last few weeks I expect this stock to continue to move higher, but not with the momentum we have seen recently and ultimately to top out around the $75 – $80 per share in the longer term.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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