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Old 05-18-2010, 10:22 AM   Nav to Top  #1
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Default UAUA - UAL Corp.

UAUA is a $3.4 billion consumer discretionary company that provides air transportation services. Technically, UAUA was in a powerful uptrend, tripling from the November low near $7.00 to the April high over $23.00. We've identified, however, a possible topping pattern that began in mid-April as UAUA was printing a fresh 52 week high. A clear long-term negative divergence (point 1 on chart) suggested momentum was slowing despite the higher prices. That was followed by a break of key price support near $20.25 and the 50 day SMA (point 2 on chart), which was just beneath the $20.00 level at the time. After breaking below the 50 day SMA on increasing volume, UAUA recently retested its 50 day SMA from underneath on much lighter volume (point 3 on chart), setting up a low risk, high return short trade. The critical resistance zone in our view now resides in the $20.50-$21.00 area. Note that the MACD has barely budged higher despite the strength in UAUA over the past several trading sessions. This suggests that sellers remain in control in the near-term.

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