Today we are going to give you on update on the Airlines sector. In November we told you that we were bullish on this sector and we still are despite the roller coaster that the index as been on the last few months. Since the November article the Amex Airline Index has been up as much as 18% but has settled back down to a gain of about 10% since then. However, we are looking for the sector to turn around again. The graph that we have provided shows the Amex Airline Index. It is made up of ten major airlines, including Continental Airlines Inc. (CAL), JetBlue Airways Corp (JBLU), and Southwest Airlines Co (LUV).

There are several important things on this chart that we want to mention. First, notice the green 200-day moving average line. In our November article about Airlines we said that a move over this line would be a strongly bullish signal, and it proved to be just that. There is also a strong trend line (shown in blue) that the index keeps bouncing off of and is just about to touch again. Finally, look at the Stochastics indicator at the bottom of the chart. It has just reached the oversold level and this has been a strong indication in the past that a reversal is coming and the index will be heading higher. We expect that the index with reach at least 59 in the next few months but we would put at stop level at around 48.

If you want to invest in the airlines, there is no ETF directly for them, but the transportation indexes, such as the iShares Transportation ETF (symbol:IYT), do invest in the airlines. There are also mutual funds that invest in the airlines and you can invest directly into the individual stocks, but be careful if you do this, because of the problems that the industry has had the last few years.

Price Headley is the founder and chief analyst of BigTrends.com.