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Airlines in a holding pattern

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One of today's best performing sectors is the Airline Index (XAL.X) up 4.13%. This strikes me as a bit odd, since pilots at Delta's commuter airline, Comair, went on strike. I wouldn't expect this news to send airline stocks into a tailspin, but I also wouldn't expect it to make them one of the best performing sectors.

Airline Index Chart - 60-minute interval

I think the chart better explains the situation that the news. XAL, like every other index, got oversold during the selling barrage. It has now rallied up to a previous high\retracement bracket, but is consolidating. I've seen this pattern on a lot of the 60-minute charts I've looked at today. Some have a steeper decline and recovery looking like a head and shoulders bottom. Others have a more rounded bottom and look like a cup and handle formation. Some are just a "V" bottom, but whatever you want to call them they all look like some type of short-term bottoming pattern. The only problem is breaking out of the pattern on decent volume. Without that it could just be another failed pattern breakout.

Various Charts

Jeffrey Canavan
Assistant Analyst

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