Delta Air Lines (DAL) gapped lower in response to earnings last week, extending its corrective phase that began in May. The down move creates a proving ground, noting the stock is testing support near $43, defined from former resistance and the 200-day moving average. There are signs of short-term downside exhaustion from the DeMARK Indicators (denoted by the red ’13’ on the chart) that suggest the sell-off is overdone. The signal supports at least a two-week rebound, noting prior signals from this model have been timely, including a counter-trend signal near May’s high. Intermediate-term oversold conditions are in place per the weekly stochastics, further increasing the likelihood that DAL finds its footing. Should the stochastics turn back above 20%, it would be a bullish intermediate-term catalyst, giving us more confidence that a corrective low has been made. Should DAL rise back into its earnings-driven gap (above $45) this week, that would give us more confidence in a sustainable rebound. Initial resistance is not until the daily cloud model, near $50, creating a favorable risk-reward profile. Prior to the corrective phase, DAL broke out decisively above long-term trading range resistance. This increases the likelihood that buyers will step in and prevent a more severe correction like Q3 of last year. Long-term momentum is positive for DAL, suggesting a long-term turnaround is intact. Final resistance resides in the low $60s. As a stop-loss threshold for long positions, we would be wary of a decisive breakdown below the 200-day moving average, which would increase downside risk to secondary support near $39. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . 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