'Glimmer of hope' for American Airlines despite sell-off following outlook cut

Trader Matt Maley sees "a glimmer of hope" in American Airlines, despite its nosedive following its cut in profit expectations for 2018.

The airline's announcement sent shares down as much as 10.9 percent Thursday. It's down more than 2 percent Friday morning.

Appearing on CNBC's "Trading Nation," Maley noted on Thursday that as the market fell to fresh lows in December, American Airlines managed to hold steady at its prior lows from October, finding resistance around $30.

"Even at the stock's lowest level in the morning, it did not break below that level," the Miller Tabak strategist said. "So there's a little glimmer of hope. If the stock could rally strongly anytime in the near future, we might be able to see a little light on this."

Many investors have pegged a broader sell-off in airline stocks to waning oil prices, but Maley disputes the notion.

"One old rule on Wall Street that has never really worked is that airlines stocks go in the exact opposite direction of fuel prices, or oil prices," Maley said. "If you look at American Airlines and crude oil, they've spent many months trading in the same direction and many months trading in the opposite direction."

In the past year, crude oil prices have fallen nearly 18 percent, while the NYSE ARCA index, which tracks major airlines, has fallen in sync, down more than 16 percent.

But Mark Tepper of Strategic Wealth Partners believes declining oil prices prove a greater fundamental risk to the airlines because they need higher prices in order to charge more for seats.

"A lot of people would think that low jet fuel prices would help the airlines," he said on "Trading Nation" on Thursday. "But oddly enough it actually hurts them, and that's really just because intense market competition forces them to give that money right back to the consumer essentially in real time."

"I'd be staying away from the airline industry in general," Tepper warned. "If I had to pick one, I would pick American Airlines because they do have the best fleet."

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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