Wednesday, March 07, 2007

Airline Index (XAL) Closes Below Its 200 Day Average



Today the Airline Index ($XAL) posted a close slightly below its 200 day moving average.

In the lower panel is the ETF for crude oil. Notice the inverse relationship between oil and the airlines. As oil moves down airlines move up. If oil trends higher airlines will come under pressure and sell off.

What's interesting is that oil has been in a range for the past 5 weeks so you would think the airlines would be in a range too, but as you can see the XAL index is much lower than where it was 5 weeks ago. If oil ever starts to move up here, these airlines might really fall apart.

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