American Airlines (AAL): Watch for a potential breakout


Shares of the world’s largest airline by passenger capacity American Airlines (NASDAQ: AAL) closed above $17 last week and the stock jumped almost 25% so far this month. During the last week, the stock gained more than 10% after the company revealed that it expects its adjusted profits for the fourth quarter to be in the range of $1.12 and $1.17 per share, nearly double its previous prediction of 50 cents to 70 cents per share.

The Airline group is scheduled to report its fourth-quarter earnings on Thursday, January 26, before the market opens. In the third quarter, the company posted a record quarterly revenue of $13.5 billion in the third quarter and the net income was $483 million. The airline expects its fourth-quarter total revenue to be 11-13 percent higher versus the fourth quarter of 2019.

$AAL watch for a trendline breakout

Technically the current price action signals suggest that a medium-term bullish trend remains intact. However, there is crucial trend line resistance to watch near $17.60/80. A sustained move above this resistance level could spark a breakout in the stock movement towards at least the $19/21 level. If sellers fail around this key area a decline and technical test back towards the $15.50/00 level should be expected.

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