Today we are going to discuss the Airlines. You've probably heard in the news the last few years about all the problems that this industry is having, and it does not appear to be getting a whole lot better yet. We will be looking at the AMEX Airlines Index (XAL). You are probably familiar with a few of the companies that are in this index. Some of the more well known ones are Continental Airlines Inc (CAL), JetBlue Airways Corp (JBLU), and Southwest Airlines Co (LUV).

In the last few days, the AMEX Airlines Index (XAL) has made some distinctly bearish movements, which you can see on the chart below. One of these was the triangle pattern that the index has been stuck in for most of the last year. It just recently broke below the red support line. It has now also moved below the green 200-day moving average line. Both of these are good indications that there will be plenty of downward movement.

Next, notice on the Percent R indicator, at the bottom of the chart, how the last few relative lows did not seem the show as much conviction for staying in the oversold area as this current move seems to have. Those moves bounced out fairly quickly, while it seems that this one is staying there, which would indicate a strong downtrend.

We think that this index will drop at least to 45 and could go as far as 40 in the next few weeks. However, if it gets back above 52 then we would get out of that trade.

There is no Airline-specific exchange traded fund available yet, but iShares does have a transportation fund that has exposure to Airlines. It is the iShares Dow Jones Transportation Average (IYT).

We also wanted to let you know that we are watching Biotech carefully. The AMEX Biotechnology Index (BTK) is right on the verge of either breaking through certain indicators that would cause it to be bearish or bouncing back to be bullish, so watch for this in future Sector Spotlights.

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