Are the Airline Stocks Due for a Rough Landing?

One the of the best performing stocks sectors recently has been the airline sector. This industry group has been surging higher with most other leading transportation stocks. One of the catalysts for the stronger industry group has been the consolidation that has taken place in the sector. There are basically now just three major U.S. carriers in the United States. Recently, U.S. Airways Group Inc (NYSE:LCC) announced a merger agreement with American Airlines. The airline stocks will likely have more pricing power due to the lack of competition in the industry.

Lower oil prices will also help the airline stocks since fuel costs are a major expense. Recently, oil, and fuel prices have declined on the back of the strong U.S. Dollar. Many traders will remember how strong the airline stocks were back in the late 1990’s when the U.S. Dollar was strong and fuel prices were low. Today, that is not the case and in fact just the opposite.

This important airline sector is now very overbought on the daily charts and could be starting to pullback. Today, leading airline stock United Continental Holdings Inc (NYSE:UAL) is declining lower by 0.72 cents to $30.63 a share. Short term traders can watch for intra-day support around the $30.35, and $30.00 levels. The daily chart of UAL is overbought and will need to consolidate a bit before trying to push higher. After a pullback or some consolidation the stock could be a candidate to trade higher.

Other leading airline stocks such as US Airways Group Inc (NYSE:LCC), and Delta Air Lines, Inc (NYSE:DAL) have similar daily chart patterns to UAL stock. Traders can also watch the regional carriers such as Southwest Airlines Co (NYSE:LUV), and JetBlue Airways Corporation(NASDAQ:JBLU) to follow the larger airline.

About Nicholas Santiago 575 Articles


Nicholas Santiago started trading in 1991. In 1997, he became a licensed Series 7 and 63 registered representative. He managed money for a large, affluent private client group. After applying his knowledge to his client base, he decided it was time to begin teaching those interested in learning his methods. He is an expert in Technical Analysis. He has become an accomplished technician in the studies of Elliot Wave, Gann Theory, Dow Theory and Cycle Theory. In 2007, he partnered with Gareth Soloway to form InTheMoneyStocks.Com and realize his dream of educating others about the truth of the markets.

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