A Picture of the Big Airline Rally

When airline stocks rally, they rally hard. That’s the idea behind today’s chart…  
 
Late last year, concerns over the global economy helped hammer airline stocks 30%-40% in just months. After the fall, we pointed out how the beaten-up sector could stage a big “bad to less bad” rebound rally. It’s simply the nature of this “boom and bust” sector.
 
Keep in mind: Airlines are legendarily bad long-term investments. They sport thin profit margins, they’re subject to wild swings in fuel costs, and they require lots of capital expenditures to keep the businesses running. This wild business model causes big swings in airline stock prices. You just have to buy them when conditions look dark and everyone is bearish… and sell when things look bright and everyone is bullish. We noted JetBlue (JBLU) as a buying candidate.#-ad_banner-#
 
As you can see from today’s chart, JBLU is performing as expected. When we identified the stock’s potential back in October, it traded for $4.50. It has since rallied to $6 per share (a 33% gain). JBLU’s competitors have staged similar rallies. We state again… when airline stocks rally, they rally hard.