The airline sector is pulling back again today. This highly popular sector has been in correction mode since early November. Each individual airline stock has its own support level where the stock will bounce or begin to rally, however, at this time most of the stocks are still in selling mode.
The Guggenheim Airline ETF(NYSE:FAA) has been declining since November 4th, 2010 and remains in a weak technical position. This ETF is trading below the daily 20 and 50 moving averages which generally indicates lower prices in the near term. However, the FAA is well above the daily chart 200 moving average and this tells us that the ETF is simply in a correction and will bounce or begin to rally around the $39.00 – $38.50 area.
Delta Air Lines Inc.(NYSE:DAL) is one of the leading stocks in the sector. This stock has been declining since early November when it traded as high as $14.50. Today Delta is sitting right on the daily chart 50 moving average which tells us it will likely decline below it. The stock will have good daily chart support around the $12.45 area and more around $11.75. Watch for bounces around these levels.
AMR Corp.(NYSE:AMR) is the parent company of American Airlines. This stock has pulled back since early November when the stock traded as high as $9.00. Currently the stock is sitting right on the daily chart 50 and 200 moving averages which is minor short term support. The stock will have much more support around the $7.23 level and this is a likely area for a bounce.
The key to trading this sector is to watch the leaders of the group. When the FAA bounces often the leading airline stocks will bounce as well. However, watch the key levels that have been pointed out on the leaders. At this time this sector is still pulling back. 
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStock.com
