Three Stocks: American Airlines, Mind Medicine, and GameStop

American Airlines

American Airlines (AAL) shares closed the day 13% lower after the company adjusted their upcoming quarterly earnings expectations lower. The stock was the worst performer of all the S&P 500 stocks today.

The company lowered their guidance after revealing that ticket demand has turned soft while domestic travel prices have been on the decline. The announcement comes as we head into the much-anticipated summer travel season which they hope will help with demand.

Other airline stocks like Delta (DAL) and United (UAL) saw additional volatility from American Airlines announcement, though both mentioned traded with significant support of their 50-day moving averages through the day.

Looking forward, investors are likely to be cautious of the airline stocks, represented well by the US Global Jets ETF (JETS) as consumer discretionary stocks have been sliding as consumers are slowing spending as a result of the prolonged inflationary environment.

Shares of American Airlines traded as low as $11.30 as the stock broke below its bearish short- and intermediate-term moving averages.

From a long-term perspective, AAL shares moved into a confirmed long-term bearish trend last month as the stock broke back below its 20-month moving average.

American Airlines Intermediate-term price target is $10.

aal stock chart

Mind Medicine

Shares of Mind Medicine (MNMD) gained more than 6% on Wednesday, after analysts at Robert W. Baird initiated coverage of the biopharmaceutical company with a “strong buy” recommendation.  Baird analysts assigned an initial target price of $27, higher than the current average target price of $24.25.

For those unaware, MindMed is a New York based company that develops products to treat brain health disorders. With many treatments in development, the company is best known for MM-120, which is currently in phase 2 testing. This and other MindMed products focus on the treatment of generalized anxiety disorder and attention deficit hyperactivity among other disorders.

The new recommendation comes nearly a month after the company missed their last earnings target on May 8.

Since that earnings miss, shares have declined as much as 17% but have recovered from support at $8. That support is following a familiar pattern for a stock shifting out of the “sub $10” universe. A follow through on this historical patter should see shares break through $10 on their way towards the next level of resistance at $12.

Today’s move was hampered by the stock’s 50-day moving average. A cross back above this popular trendline should draw more technical buyers to the stock as buyers.

mnmd stock chart

GameStop

GameStop (GME) shares fell more than 10% after a healthy 24% move higher yesterday.

The volatility and selling pressure is part of a larger picture decline that should result in the stock returning to its pre-MEME rally price near $10.

Shares rallied yesterday after the announcement that the company had completed a sale of GME shares to raise capital. That move was a response to the recent rally that represented a short-term revival of the once popular MEME craze after its original leader “Roaring Kitty” posted a cryptic string of messages to the platform “formerly known as Twitter.”

Today’s selloff took the stock back below its short-term 20-day moving average, what I refer to as the “Trader’s Trendline.”

The next “line in the sand” is $20, a psychologically significant price for all stock based on its psychological properties.

Expect that a break below $20 will draw selling volume into the market, driving shares of GameStop back towards $10.

gme stock chart

About the Author

Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.

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