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Delta Air Stock Can Rally Another 10% After Earnings. The Chart Shows How.

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Airline investors on Thursday are breathing a sigh of relief as Delta Air Lines  (DAL) – Get Delta Air Lines, Inc. Report stock is rising almost 4% after reporting earnings.

Before the open, Delta reported better-than-expected earnings and revenue results. The rally comes amid mixed action in the overall market and as we sit on the cusp of earnings season.

It also helps spark some confidence about the airline industry, as Delta was able to churn out a profit in the fourth quarter even as the Covid omicron variant is slowing the Atlanta carrier’s recovery.

Despite the new variant, the company expects the impact to be short-lived and the recovery to normalize around President’s Day next month.

Interestingly, United Airlines  (UAL) – Get United Airlines Holdings, Inc. Report, American Airlines  (AAL) – Get American Airlines Group, Inc. Report and Spirit Airlines  (SAVE) – Get Spirit Airlines, Inc. Report are all higher than Delta on the day.

Trading Delta Air Lines Stock

Daily chart of Delta stock.

Chart courtesy of TrendSpider.com

Earlier this month, I broke down the airline stocks as they were trading pretty well despite the spreading omicron variant.

Even with record cases counts, the airlines weren’t flinching. Nor were the cruise stocks.

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Look at the way Delta stock has continued to gain altitude, pushing through key levels and moving averages while riding the 10-day moving average higher.

Cheesy puns aside, this is impressive price action in the face of multiple headwinds. And when a stock rallies despite bad news, that’s fairly bullish.

While the stock this morning temporarily pushed through the 200-day moving average and last week’s high, it’s now back below the former and struggling to hold the latter.

If Delta stock loses both marks, it may very well retest down into the 10-day moving average. Below that puts the key $40 level on deck.

The real fun comes, however, if Delta Air Lines can clear the 200-day and downtrend resistance (blue line).

If it can do that, then the share price may be able to climb all the way to the $45 to $46 area, where it has twice found major resistance.

If it’s able to push through that, then Delta may test the declining 200-week moving average. 

Presently, that’s about 10% above current levels, although it will likely be lower unless the stock goes on a big run in a short time.