By Nicholas Santiago on March 3rd, 2010 1:04pm Eastern Time
The airline stocks have climbed higher throughout 2009 and this first quarter of 2010. The stocks of many of the major carriers have nearly doubled in price since early November 2009. Similar to most industry groups, the airline stocks trade together.
The best airline of the group looks to be Southwest Airlines Co (NYSE:LUV). This stock is technically still very strong on the daily chart. Southwest Airlines Co is trading above its daily 20 and 50 moving averages, which signal that the trend is up and the stock has good support at $12.00. This company also has a slightly different business model from the legacy carriers in that they have only one type of aircraft that they fly. This factor in their business model has kept this airline profitable for many years as most of the others struggle to survive and make profits.
The next airline that looks good on the charts is Continental Airlines Inc (NYSE:CAL). This stock is rumored to be taken over by either American Airlines (NYSE:AMR), or United Airlines (Nasdaq:UAUA) as the industry seeks to consolidate. This stock has nearly doubled in price since early November and is currently at a double top resistance formation on the daily chart.
While United Airlines (Nasdaq:UAUA) and American Airlines (NYSE:AMR) both look very strong technically, on the charts at this current time there is one issue. United airlines has more than doubled in price from the early November 2009 time frame. This stock could be due for a pullback as it is now getting extended. American Airlines (NYSE:AMR) has nearly doubled in stock price from early November 2009 and remains technically strong on the daily chart. However, both stocks are not likely to be a takeover candidate as they are both very large companies. Therefore, they are likely to acquire another airline such as Continental Airlines (NYSE:CAL) or U.S. Airways Group (NYSE:LCC).
U.S. Airways Group (NYSE:LCC) looks strong technically on the daily charts. This stock is a likely takeover candidate as it has desired routes in the United States.
When the airlines rally like this it usually can only mean few things. The first would be crude oil is falling and that is not the case. The second is the economy is improving and that still remains to be seen. Right now consolidation would be the best guess of what is most likely going to take place in this sector
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