Airline Stocks Heading Lower

Today I shorted a few of the airline stocks. You'll notice in the above chart of the Airline Index (XAL) that the 50 day moving average has provided excellent support and resistance for this group of stocks. The stochastics have also been excellent at identifying overbought and oversold levels. When you combine the 50 day moving average with the stochastics, you increase your odds of this trade working.

Last week XAL closed at the 50 day moving average with the stochastic oscillator in overbought territory. Higher oil prices may have been the catalyst for the airline stocks to move lower today but I feel they were technically setup to move lower anyway so I shorted them this morning at the first sign of weakness. We'll see if they can continue moving lower.