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Airline stocks on our radar screen

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Airline stocks should perhaps be on the radar screens of bullish traders as the technicals are shaping up for a short-term move higher. There are some good levels to be looking for, not only on the bar charts, but also those found in the supply/demand charts. Today, the XAL.X has broken above a downward trend and tomorrow this group might just begin pulling away from the gate if the index can trade above the 152 level, breaking above 38.2% retracement and 200-day moving average.

Airline Index (XAL.X) - last seven months

Recent relative highs found in the XAL.X have come just under the 200-day MA at 153, but with broader technology take a breather, bullish traders might want to have a couple of airline stocks on their watch list for a move higher. PremierMarkets.com has profiled shares of Frontier Airlines (NASDAQ:FRNT) as bullish for a couple of months when that stock broke above the $14.06 level.on May 25th. We dropped coverage of a bullish play in the stock as the stock got a bit ahead of the group, but then turned to a profiled option play in the August $15 calls (FUOHC) on May 02 when the stock was trading near $14.50. PremierMarkets.com still likes a bullish trade in FRNT at current levels right at its 200-day MA of $16.00.

Airline Index (XAL.X) - $2 box

After a nice move higher in April, the XAL.X has had a 3-box reversal to the $146 level. Today, the XAL.X threatens to reverse its chart back into a column of X's with a trade at $152. A trade at $154 would give another double top buy signal and bearish resistance at $154 would be a swing trader's target. If the XAL.X were to reach the $154 level, its PremierMarkets.com understanding that some airline stocks should also move higher.

Lost our minds, but not principles

In early May, PremierMarkets.com received several e-mails from subscribers that we had lost our minds for profiling an airline stock. Since the close of trading on May 2nd, shares of FRNT are up 8.7%, while the NASDAQ Composite is down 1.92%. Traders that will view their trades and stay open to "unconventional ideas" often times may feel like they're losing their minds, but may find they're not losing their money. A mind is a precious thing to waste and so are good bullish plays.

Jeff Bailey
Senior Market Technician

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