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Do JETS' Technical Round Trips Signify Turbulence Ahead For Airline Stocks?

Do JETS' Technical Round Trips Signify Turbulence Ahead For Airline Stocks? - SPDR S&P 500 ETF ETF:SPY, JETS

The S&P 500 has been hitting new all-time highs for a week now, but somebody forgot to tell the airline industry. The U.S. Global Jets ETF JETS remains down 6.4 percent so far in 2016 and is up against some short-term technical resistance.

In a little more than a month’s time, JETS has done a round-trip from $23.52 down to below $20 then back up to the $23.50 level. The recent dip below $20 was the ETF’s lowest point since last August’s flash crash. If JETS wants to re-test its long-term resistance at around $26, it will need to break significantly above $23.50 in coming days.

If a breakout doesn’t happen, not only is the ETF in danger of dipping back below $20, its support line appears to be sloping downward, meaning that the next dip could be even deeper than $19.60.

It seems as though the market simply doesn’t trust many of the airline stocks during this time of global economic uncertainty. Airlines have historically been hit hard during recessions, and that market fear and mistrust has top JETS holdings American Airlines Group Inc AAL, Delta Air Lines, Inc. DAL, Southwest Airlines Co LUV and United Continental Holdings Inc UAL all currently trading at forward P/E ratios of 10 or lower.

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Disclosure: The author holds no position in the stocks mentioned.

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