Technically speaking, American Airlines (NASDAQ:AAL) is one of the worst laggards among major enterprises, with AAL stock down more than 26% since the start of the year. In sharp contrast, the benchmark S&P 500 index has gained roughly 11% during the same period. However, a segmented view presents a different perspective.
Since the close of April 21 — when AAL stock finished the session at $9.07 — the equity has surged, gaining about 42%. That’s notably better than the S&P 500, which moved up a little over 26% in the same frame. Unfortunately, there’s a solid chance that the strong run may encounter a corrective phase.
In the trailing 10 weeks, AAL stock has printed a 7-3-U sequence: seven up weeks, three down weeks, with an overall upward trajectory. On the surface, the balance of accumulative sessions outweighing distributive may be encouraging. However, over the next 10 weeks, the conditional drift has a tendency of sending AAL down, between a median low of $11.05 and a median high of $11.44.
On the other end, the aggregate or baseline drift of AAL stock anticipates a gradual decline to between $12.08 and $12.90. Of course, this assertion is an in-sample argument, taking from data covering January 2019 through July 2025.
To get a statistically relevant picture, one must conduct an out-of-sample test to control for outside variables. Here, a test on the tendencies of the 7-3-U sequence between January 2015 through December 2019 reveals the same trend: a negative conditional skew, which is more pronounced than the expected aggregate skew.
Fundamentally, the bearish narrative against AAL stock also appears to make sense. While the consumer has been strong, it’s clear that tariffs and other economic pain points are dragging on sentiment. A weaker environment will likely translate to reduced travel demand.
Those who are aggressive may consider the 13/12 bear put spread expiring Oct. 17. If AAL stock falls through the short strike price ($12) at expiration, the maximum payout clocks in at over 122%.
Credits: American Airline
