Stock Trading Predictions & Technical Analysis: DAL

Thursday, December 17, 2009

DAL - Appears to have Topped

DAL -SELL SIGNAL

Although it's very rare for me to give SELL SIGNALS on an up day and with the uptrending channel still intact, there are clear signs that appear to indicate that DAL has hit a top, or at least a temporary one. DAL had first given us a SELL SIGNAL on Monday by hitting another high while closing lower. After a small pullback, DAL has closed higher today while hitting a high slightly lower than on Monday. Now the waring sign within these last few sessions is that the volume has been sharply trending down along with the OBV having a negative divergence. This is usually the sign of a top. Here a few possible scenarios for the upcoming sessions. First you could see DAL trade strongly higher again tomorrow which would probably be accompanied by stronger volume, which I doubt we'll see. A second scenario is having another but perhaps more distinct dark cloud pattern similar to the one we had Monday, where DAL could hit a new high while closing sharply lower. A third scenario is seeing DAL trade sideways for a while between $10.50 and $11.65, until it breaks up or down one way or the other to give us a BUY SIGNAL or SELL SIGNAL. I personally feel that DAL has a lot of potential of breaking down below $10.50 in the upcoming sessions at which time you could expect to see it pullback as low as $9.00 to

$10.00. Please note that my SELL SIGNAL may be a little pre-emptive, as DAL has yet to break down below its up trending channel. However, I would strongly suggest to set a VTSO or Stop Loss order to protect any gains you might have.

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TECHNICAL INDICATORS

BUY SIGNAL: Indicates the possibility of the start of a new up trend or the continuation of the current up trend. This signal may be often given in the early stages of a potential new up trend that was preceded by a down or sideways trend. Such signals do not always succeed and may fail at time.

BUY: Indicates that the current up trend is already in motion and a BUY SIGNAL was already given earlier. A BUY does not necessarily indicate that the stock will continue higher from here, but simply that the stock is trending up. The further into the trend you decide to take a long position, the more risk you have of seeing it reverse back down sooner rather than later.

STRONG BUY SIGNAL: Indicates a stronger, more significant and reliable signal than a BUY SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG BUY: Indicates that the current up trend is already in motion and that STRONG BUY SIGNAL was already given.

SELL SIGNAL: Indicates the possibility of the start of a new down trend or the continuation of the current down trend. This signal may be often given in the early stages of a potential new down trend that was preceded by an up or sideways trend. Such signals do not always succeed and may fail at time.

SELL: Indicates that the current down trend is already in motion and a SELL SIGNAL was already given earlier. A SELL does not necessarily indicate that the stock will continue lower from here, but simply that the stock is trending down. The further into the trend you decide to sell a position, the more risk you have of seeing it reverse back up.

STRONG SELL SIGNAL: Indicates a stronger, more significant and reliable signal than a SELL SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG SELL: Indicates that the current down trend is already in motion and that STRONG SELL SIGNAL was already given.

HOLD: Indicates that traders who already hold this stock, should hold on as long as the trend persists. This signal is usually given during an up trend for which it would be considered too risky to take a long position at this point.

STRONG HOLD: Indicates that the current trend has been in motion for a while and rarely deviated away from the trend. Although the stock may continue higher, there may not be enough potential up side to trigger a BUY SIGNAL. This type of indicator usually means that the stock has very strong support levels which may have been tested but not broken.

WAIT: Usually given during a sideways trend for which we are waiting for a move that would trigger a BUY SIGNAL or SELL SIGNAL. This could also indicate uncertainty and the risk that would be taken if you were to take a long position at the current level. Taking a long position after giving a WAIT indicator is considered a gamble.