AMR in OverSold Territory

Published on Tuesday, 24 January 2012 08:00 Written by TradersHuddle Staff

New York, January 24th (TradersHuddle.com) - Shares of AMR Corporation (NYSE:AMR) closed the trading session at $0.24 well below calculated support at $0.48 placing the stock in oversold territory, as investors and money managers have been moving out of the stock

AMR Corporation (NYSE:AMR) operates and owns an airline that provides scheduled passenger, freight, and mail service throughout North America, the Caribbean, Latin America, Europe, and the Pacific. The Fort Worth, Texas based company also provides aviation services, call center management services, and investment advisory services.

AMR's stock was trading in a well defined range with support at $0.48 and resistance at $0.78, prior to its decline. It was evident how traders went out of the stock, when it broke calculated support sparking the current down draft.

From a technical perspective the AMR stock is in severe pain, as the harsh sell-off could place a heavy burden of buyers wanting their money back, generating a price dynamic where buyers will become sellers when a bounce materializes. It can be expected that previous support becomes resistance, as a new range gets defined, therefore the maximum move for the stock should be calculated to return to previous support at $0.48. Traders wanting to establish a long position in AMRto play an oversold bounce should consider waiting for evidence of buying at a specified area to use it as a pivot placing stop losses.