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United Airlines Holdings Inc. - (UAL) - September 20, 2023

United Airlines (UAL) along with its competitors, has seen its relative strength weaken dramatically in recent weeks. The group outperformed through the summer boosted by strong travel demand, but since several airlines posted profit warnings earlier this month blaming high and rising fuel and labor costs, sentiment toward the sector has soured.

Over the last four months, UAL has completed a round trip within the SIA S&P 500 Index Report, climbing from the red zone to the green zone between April and July, then falling back into the Red Unfavored Zone over the course of September. Yesterday, United landed in 282nd place, down 215 positions in the last month.

Within the transportation sector, railroads have also been struggling in the rankings, while some trucking and courier companies have held up better. Two transportation companies which remain in the Green Favored Zone are FedEx (FDX) and Old Dominion Freight Line (ODFL). This chart reminds us of the old saying “Stocks go up like an escalator and down like an elevator”. An uptrend in ‘united Airlines (UAL) which took 10 months to unfold between the October 2022 market bottom and August, has quickly unraveled. Over the last month, UAL has turned decisively downward, establishing a new downtrend of lower highs, has snapped its previous uptrend support line, and has taken out both its 10 and 40-week moving averages.

Next potential downside support appears near the $40.00 round number, which has flipped between support and resistance in the past, then previous lows near $35.00. Initial resistance on a rebound appears near $47.50 a recent breakdown point, then the $50.00 round number.

This 1% chart highlights the severity of the recent downturn in United Airlines (UAL) shares. UAL started to crumble after a July rally faltered and the shares staged a bearish Double Bottom breakdown in August. The selloff accelerated following a second Double Bottom formed a Bearish Catapult. Since then the selloff has extended without even a 3-box bounce indicating consistent distribution. More recently, UAL has completed a bearish Spread Double Bottom breakdown and snapped a 45-degree uptrend line.

Potential downside support levels appear near $41.85 based on a horizontal count, followed by $40.50 and $38.25 based on previous column lows. Initial resistance appears near $46.70 based on a 3-box reversal.

With a bearish SMAX score of 5, UAL is exhibiting weakness against the asset classes.

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