Chart of the Week: Airline Stocks in Takeoff Mode?

One thing that always frustrated me in my early days as an independent trader...

By the time I heard about a great stock market opportunity, the best gains were already in the bag by traders who got in before the trade was completely obvious.

That's why I'm sending out my "chart of the week" a day early.

Back on December 8, I noted a pending recovery among airline sector stocks, and an opportunity to own the US Global Jets ETF (JETS), which is comprised mostly of airline stocks of course.

Since then, the group has spent the last 3 weeks working off all the fears about the omicron variant, and its presumed impact on ticket sales and flight ops.

Yet with all those negative headlines, the JETS ETF just won't go down any further. It's yet to make a new low - and appears ready to surge higher.

As can see on the chart above, the JETS ETF presents a nice opportunity to play the rebound in the airline travel sector before it becomes frontpage news.

• #1 - surge in volume as previously-bullish traders abandon their positions.
• #2 - collapse in stock prices, then a sharp rebound (also on heavy trading volume) as institutional traders take advantage of the opportunity.
• #3 - the JETS ETF rallied up to major resistance at $22.

Cutting to the chase - the JETS ETF is now in the process of making a second attempt at breaking through that same $22 resistance level.

I think it's going to rally through that resistance level and keep going.

What about the omicron variant? Researchers are still sorting out the data, but if airline stocks move substantially higher, it'll be because the worst of the news is already reflected in their stock prices.

That's the key no one ever talks about in stock investing. Stocks move up (or down) in anticipation of future events.

So, as the omicron threat dissipates in coming weeks (as it has in South Africa, where it originated already), what happens to airline stock prices? They keep moving higher, anticipating far better business conditions in the weeks and months ahead.

I've been telling my premium subscribers about this opportunity since right after Thanksgiving, when I recommended 2 airline stocks for the goodBUYs premium portfolio.

Both of my individual airline stocks are already up by 4-6%, and I expect them both to double in price over the next 12-18 months. Airline stocks are cheap, no matter whether you measure the opportunity on a revenue-per-share, or on an earnings-per-share basis.

But even buying the JETS ETF offers a very good risk/reward possibility, in my opinion.

Best of goodBUYs,

Jeff Yastine