Delta Airlines (DAL) $ CEO Ed Bastian said he expects 2021 to be the year of recovery (link). As investors, we could react to the headlines and buy into Delta and the other airlines. The early indications are encouraging, the chart for Delta looks interesting.
DAL Technical price support is where the stock is at now, so stop losses could be tight at 5% or still reasonable at 10% of the current price. The share price is above the 50-day moving average – a positive intermediate trend indicator. I would not be surprised to see a break below the 50-day M.A. as a head fake and then see the shares run higher. That would be a natural way to get the algos triggered into a sell signal and wash out the stop losses. Technical trading does have some short-term, chess likes move and counter move strategy to consider. Triggering the algos to create a better buying opportunity is one aspect of working the algorithms knee jerk programming.
Fly Leasing (FLY)
We have a position, FLY Leasing, in our LOTM Ten Under $10 for the Double that should benefit from the Delta news as well. FLY looks excellent technically, for a pop in price next week. Good news for the Airlines is also good news for the Airline Leasing industry.
FLY Stock is at $10 – we could see a continued positive move to $12.00 in the coming weeks. We would project $14 to $15 in the coming six months. This is one of our favorite trading patterns – rising pennant – see below.
Short-term technical View of Fly Leasing (FLY)
Long-term view below for FLY
LOTM considers both of these ideas, DAL & FLY, as trades, and not core positions in our holdings. As trades, we would give the trade a three-to-six-month timeline. We would review regularly to see if the position warrants holding in a rising chart pattern. We have a minimum 30% upside goal and maximum 10% stop loss. We often dollar cost average, even on the shortest trade timelines to lower our breakeven but follow the ten percent stop after three buy-ins into a trading position. Email if you have questions on this as we have found it to be a really effective tactic in trading.
Good Luck! Remember, “The Trend is Your Friend” in trading but “Value is the Wealth Builder” in investing. Know your objective!
Where Value meets Buy Signals!
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* An account related to LOTM holds a position in this security.
Neither LOTM nor Tom Linzmeier is a Registered Investment Advisor.
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