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The airline industry has been one of the most beaten down in the last year. AMEX Airline Index [XAL] was down more than 50% in the last months, and in July it was down almost 70%. What is interesting is that the low occurred in July - compared to other industries where recent lows have been reached during October after heavy sell-off. Earlier turnover was due to declining crude oil and gasoline prices which are down more than 50% since the July peak.

click to enlarge


Bad news about global economies will still weigh on crude oil and decreasing demand will send the price lower, which will fuel airlines companies. The chart above shows recent lows higher than the previous bottom, while usually it is a strong bullish pattern - the same seen in early 2003 before the AMEX Airline Index had bounced. Have a look also at Adam Hewison's video with technical analysis for one of the biggest airlines, UAL Corporation (UAUA).

The major AMEX Airline Index constituents are the following:

Source: Airline Industry Not Flying High