Stock Of The Day: Is American Airlines About To Takeoff?

American Airlines Group Inc. AAL shares continue to trend higher on Thursday. The stock has been rallying after reaching an important support level.

The move may continue. This is why we have made it our Stock of the Day.

There are a lot of old expressions and sayings on Wall Street. Some of them may be outdated, but some are not. One of these is "markets have memories."

In the stock market, certain price levels have more importance than others. These are called support and resistance levels.

If a stock is trending lower, it's because there is more supply than demand. There are more shares for sale than there are to be bought. Traders who wish to get their sell orders executed are forced to push the price lower to get buyers interested.

This makes the stock trend lower.

Read Also: Bitcoin Breaks $96,000 Ahead Of ‘Pivotal Week’

At a support level, the dynamic changes. There is enough demand to absorb all of the supply. This is why downtrends end at these levels.

If a stock is headed higher, it's because there is more demand than supply. There are more shares to be bought than there are for sale. Traders who want to buy are forced to pay premiums and outbid other buyers.

This pushes the stock higher.

When the shares reach resistance, the dynamic changes. There is enough supply to fill all of the demand. Market rallies end at resistance levels.

Market memory refers to the fact that these important price levels can retain their importance for a long period of time. This can be seen on the chart of American Airlines.

When the stock crashed during the COVID-19 pandemic meltdown, it found support around $8.80. Four years later, in July 2024, it found support at this important level again.

Now the stock appears to “remember” this level. It has found support at it again.

The last two times it reached $8.80 were each good buying opportunities.  Now could be one as well.

Read Next:
• US Manufacturing Activity Contracts In April As Tariffs Push Input Prices Toward 3-Year Highs

Photo: Shutterstock