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Airline Stocks Scream Mayday

|Includes: AAL, AAL, DAL, United Continental Holdings, Inc (UAL)
Has anyone looked at the airline sector lately? These stocks are simply falling out of the sky. This industry group has always been considered the red headed step child of stocks, however, these stocks have been decimated. The scary part about this sector is that despite the airline stocks being oversold and extended to the downside, these stocks could go a bit lower before having staging a dead cat bounce.

United Continental Holding Inc.(NYSE:UAL) is one of the leading stocks in the group. This stock has declined by nearly $10.00 since May 19, 2011 when the stock traded as high as $26.84 a share. Traders should watch for short term daily chart support around the $16.00 area. If that level fails to hold the stock could test the $14.50 level. This is not a pretty picture for this stock.

Another leading airline stock that has been declining this year is AMR Corp.(NYSE:AMR). This leading airline stock is trading around $4.00 a share. This stock looks as if it could trade down to $3.50 before seeing any meaningful chart support. The last time AMR stock traded this low was in July 2009.

Delta Air Lines Inc.(NYSE:DAL), U.S. Airways Group Inc.(NYSE:LCC), and Southwest Airlines Co.(NYSE:LUV) are all trading at new 52 week lows. These stocks also look as if they could have a bit more downside in the near term. Investors should remember, these stocks simply cannot handle $100.00 oil.

Nicholas Santiago