Are The Airline Stocks About To Take Off?

The one sector that has been showing relative strength since July of last summer is the Airline Index (XAL). If you look at the above chart, you'll notice the ratio line (middle panel) has been outperforming the S&P since July and has just made an 8 month high. The main reason for the relative strength in this sector is due to tumbling oil prices.

Even though the airline stocks have been holding up better than the rest of the market, they are still in a trading range. I think a move in the XAL index above the September high (resistance) will be quite bullish. Some of the components of the XAL index are: ALK, AMR, CAL, DAL, JBLU, LCC and UAUA. These airline stocks are definitely worth keeping an eye on.