Bearish sentiment for ALK now taking hold

Alaska Air group is one stock which has been under pressure in the last few weeks, and taking a look at the daily and monthly charts, this heavily bearish sentiment looks set to continue with further downside momentum now building.

Starting with the daily chart, the move through potential support in the $61.50 area and denoted with the heavy blue dashed line on the accumulation and distribution indicator was key as the stock price moved firmly away from the volume point of control, and once through $61 there was only one way the price was set to go, due South. Here we can see a classic price waterfall supported with increasing and strongly rising volume confirming the strength of selling in the move lower. This is volume price analysis 101! Yesterday’s price action and ultra high volume has added further weight to the bearish sentiment and confirmed by the trend monitor indicator which remains bright red. In today’s trading session we have seen a minor attempt to rally, but the volume is looking lightweight, and for any meaningful reversal we will need to see sustained buying. This is not evident at present, so where next for this stock, and for this we need to consider the monthly chart.

The outlook here could best be described as ominous. Bearish price sentiment has now taken hold as we move away from the volume point of control at $65 and the extended congestion phase of the last 12 months. Below, there is very little to provide any support, and with a low volume node in the $50 region, expect to see the price move swiftly through this area and down towards the $45 region where some potential price support awaits. Note the potential price support levels of red and blue dotted lines on the accumulation and distribution indicator are mild, and therefore offering little in the way of meaningful support. If these are breached, we may see a very deep move to even lower levels at $32 in the longer term. So a rocky ride in prospect for this stock lower in the longer term.

By Anna Coulling

Indicators from Quantum Trading and charts from NinjaTrader