ALK Short Trade Setup, Airline Sector in Confirmed Bear Market

Despite plunging oil prices, the airline sector topped nearly a year ago & would appear to be headed much lower in the coming months, especially if/when oil prices start to rise. This 10-year weekly chart of the $XAL (Amex Airline Index) shows that after a monstrous 757% gain (coincidental, as the 757 was one of the most popular commercial airlines every produced... I calculated that gain off the March '09 lows to the Jan '15 high), the $XAL went on to break down below its bull market uptrend line in August, backtesting the trendline from below a couple of months later & has clearly rolled back over since. The long-standing negative divergences leading up to the 2015 highs help to confirm the bearish breakdown & the fact that the bear market in the airline sector will most likely continue well into 2016.

$XAL weekly Jan 7th

$XAL weekly Jan 7th


One of several airline stocks on my radar is ALK (Alaska Air Group, Inc.). ALK looks poised for a likely decent to at least the 61.50 level & quite possibly as low as the 42 area before all is said & done. ALK will tirgger a short entry on a break blow 74.20 with a suggested stop based on a 3:1 or better R/R to one's preferred price target(s). The prices targets for this trade are T1 a 70.88, T2 at 61.80, T3 at 50.80 & T4 at 42.30.  note- since I began annotating these charts & composing this post, ALK went on to trade below 74.20 & as such, will be posted directly as an Active Trade at the current price of 73.90.


2017-03-08T21:20:07+00:00 Jan 7, 2016 1:08pm|Categories: Completed Trades - Short|Tags: |Comments Off on ALK Short Trade Setup, Airline Sector in Confirmed Bear Market