The major airline stocks have rallied higher with the overall stock market recently. However, this sector is now trading at extended levels and this is where profit taking usually occurs. The Guggenheim Airline ETF(NYSE:FAA) is starting to near extended territory and when this happens this ETF should pullback or move into a corrective stance. The FAA will have important resistance around the $43.00 area. Currently the airline ETF is trading at $41.40. Therefore, this ETF does not have much more upside before reaching my important resistance point.
Delta Airlines Inc.(NYSE:DAL) is leading airline that is already extended on the daily chart. However, it could trade into the $14.00 -$14.50 daily chart resistance level from June 2010. However, whenever stocks such as Delta get extended profit taking will occur even at the current levels. Since August 25th, 2010 Delta Airlines Corp. has rallied higher by 40.0 percent. While this is a major move higher and should be respected it is important to note that a pullback should take place soon.
AMR Corp.(NYSE:AMR) is another leading airline stock that has soared to the upside over the past week. This stock has now traded higher into the daily chart 200 moving average which should serve as important resistance. However, it is common for stocks to overshoot important moving averages before pulling back. The daily chart resistance levels for AMR Corp. are $7.75 and $8.15. At this time this leading airline stock is already extended.
United Continental Holdings Inc.(NYSE:UAL) continues to look very strong on the daily chart. This stock is actually not at extended levels yet and remains in a good uptrend. However, this stock will come into important resistance around the $30.00 area. Therefore, this leading airline could potentially have more upside before reaching major resistance levels.
The airline sector has rallied sharply higher recently and looks very strong. However, many of the leading airline stocks are getting very extended at current levels. When this type of price action takes place it is natural for these stock to experience institutional profit taking.
