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A silver lining of the dastardly bearish sneak attack Wednesday is the revelation of relative strength. You see, in the wake of a selling raid, healthy stocks stand apart from their beaten-down brethren. Their uptrends remain firm, their support levels intact.
One such space that has come to my attention is the airline industry. Anyone can attest to their beauty, even at a cursory glance. But one of the best ways to illustrate the strength emanating from airliners is to see how their price behaved last week relative to the 20-day moving average.
On the one hand, today’s trio all remained above their respective 20-day moving averages during last week’s tumble. The broader market, on the other hand, slipped well below its 20-day like a hot knife through butter.
Without further ado, here are three airline stocks that are flying high.
Airline Stocks to Buy: Southwest (LUV)
Southwest Airlines Co (NYSE:LUV) shares arguably boast the prettiest chart of the bunch. LUV stock sits a stone’s throw from new all-time highs and is already up 18.7% year-to-date. Like all well-behaved bullish stocks, LUV is perched atop a rising 20-day, 50-day and 200-day moving average.
Its meanderings over the past quarter have taken on the form of a cup-and-handle pattern. For the uninitiated, the cup-and-handle formation is a continuation pattern that is completed (and confirmed) once the stock breaks above resistance. LUV stock is staging its breakout attempt as I type, making today an appropriate time to deploy bullish trades.
If you think the good times continue to roll for Southwest Airlines, then buy the July $60 calls for around $1.95.
3 Airline Stocks to Buy: United (UAL)
Our next airline stock is United Continental Holdings Inc (NYSE:UAL). Like its predecessor, UAL sits a few cents away from an all-time high. Year-to-date, UAL stock is up 8%.
Over the past two weeks, UAL stock has developed a high-base pattern. And that’s a good thing as it’s allowed UAL to work through overbought conditions. It also provides an easy entry point for spectators looking to get in on the action.
While the stock may need a bit more consolidation before it’s ready for another leg up, the time to prep for the breakout is now.
Watch for a break of the $79.15 resistance area, then buy the July $77.50 calls for around $4.85.
Airline Stocks to Buy: Delta (DAL)
Delta Air Lines, Inc. (NYSE:DAL) rounds out today’s high-flying airline stocks with a pullback pattern. Unlike its peers, DAL stock retraced back down to support last week creating a potential buy-the-dip setup. Like they often do in bullishly trending stocks, buyers stepped up to defend the rising 20-day moving average last week.
If you’ve been waiting for a lower-risk entry in Delta, this setup is as good as any. Continued strength should carry shares back to $50, and then $52, in the weeks ahead.
Wait for a pop above today’s high of $48.72, then buy the July $48 calls for around $2.60.
At the time of this writing, Tyler Craig held no positions on any of the aforementioned securities.