The airline stocks as measured by the Guggenheim Airline ETF ($FAA) are down over 2% today and have fallen 5% in the last 3 sessions from a multi-month high. The number cause has been a 15% rise in the price of light sweet crude oil in the last 2 weeks.
One of my favorite names in the airline sector, US Airways Group ($LCC) is down over 6% today and has lost 13% of its value in the last week. Last Thursday LCC closed at its best level since early 2008, now it is struggling to stay above its 50-day moving average.
The correlation between airline stocks and the price of oil is clear. If you feel oil is going to fall, a smart play would be $FAA or some of the better acting airline stocks. On the flip side, if you believe in $125/barrel oil in the coming months, please avoid the airline stocks.
I personal feel oil will be in the triple digits, however the price of black gold will fluctuate and when the triple digits arrive it will likely create an attractive buying opportunity for airline stocks. Therefore my strategy is to be patient and look for lower prices in the sector.
Market expert and TV personality Matt McCall blogs about what is really moving the markets. He will emphasize Exchange-Traded Funds (ETFs) and individual stocks throughout the trading day.
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