Airline stocks have had a hard time getting any attention from the media or traders lately, largely due to the wild success the markets have had, the excitement over Bitcoin, and Washington-related news.
You might look at the price of oil and assume that airlines are having a rough time - but you would be wrong. Many airline stocks have held steady in light of higher oil prices. One name in particular has pushed ahead, and may be ready to push even further.Taking a technical look at Southwest Airlines
So, for now we cannot argue the strength of the stock. But the next question is: when to jump on this train? Well, just like our Gap
Technical traders will expect the move into the highs ($64.39) to hold on the first try. Given the recent, rapid movement, it is widely expected that traders will use that resistance area to take short-term profits. Could you blame them for taking in a 15% profit in just a few weeks?
Profit-taking at these highs may put enough pressure on the stock to slow its progress. This is a good thing. See, stocks don't like to move too far from their 20-day moving average. Just look back on any chart ever. So given that the stock is moving into resistance and is extended, many will take the approach of "buy the dip."
After a brief pause or even a pullback in the stock, a new wave of traders will look to buy once the stock breaks above the highs ($64.39). The last time the stock broke above highs, it trended higher by 25%.