Alaska Air Flies Higher

02/08/08 09:41:16 AM

by Arthur Hill

Alaska Air is bucking the trend of the overall market with a resistance breakout on good volume.

Security: ALK
Position: N/A

Alaska Airline (ALK) consolidated from August 2007 to January 2008 and broke resistance with a big surge in February. The stock touched support around 21–22 at least three times and resistance around 27–28 at least twice. Overall, the pattern looks like a large rectangle and the breakout opens the door to higher prices. In addition to breaking its prior highs, the stock also broke the 200-day moving average. See Figure 1.

FIGURE 1: ALK, DAILY. Alaska Air consolidated from August 2007 to January 2008 and broke resistance with a big surge in February.

Graphic provided by: TeleChart2007.

Based on traditional technical analysis, the upside target is to around 35. The length of the rectangle can be added to the breakout for a target. The length is roughly 7 (28 - 21 = 7). A seven-point advance from the breakout would extend to 35 (28 + 7 = 35).

FIGURE 2: ALK, DAILY. Upside volume surged as the stock bounced off support in January and remained strong on the February breakout.

Graphic provided by: TeleChart2007.

Volume and relative strength confirmed the breakout. Upside volume surged as the stock bounced off support in January and remained strong on the February breakout. This shows strong buying pressure and should provide fuel to continue the advance. The bottom indicator window shows ALK relative to the S&P 500 ETF (SPY). This indicator traded flat for nine months and then broke resistance with the January–February surge. ALK is once again leading the market and this is bullish. See Figure 2.

Arthur Hill

Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.

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Alaska Air Flies Higher

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