With the Dow industrials making new highs and the Dow transports pulling back to their lowest levels of the month, traders and investors have not lacked for prognostications on what this “lack of confirmation” may mean for stocks as a whole over the next few weeks.
But weakness in the transportation stocks also means that traders and investors have not lacked opportunities to buy markets that have pulled back to levels where buyers historically have found prices too attractive to resist.
Airlines stocks have been one area within the transportation sector where some of the selling has been most aggressive in recent days, sending stocks to new, short-term lows and technically oversold territory in many instances. US Airways Group (NYSE: LCC), for example, has has closed lower for four days in a row, the last two in technically oversold territory above the 200-day moving average, and are trading at their lowest level since climbing back into bull market territory in late January.
The selling in LCC has given the stock a top, 10 out of 10 rating ahead of trading on Friday. US Airways also has a positive edge in the short-term of more than 7%.
With a smaller, but still statistically significant short-term edge of almost 3%, shares of Jetblue Airways (NASDAQ: JBLU) have also pulled back to levels where traders have been more inclined to buy than sell. Jetblue closed lower for a fourth consecutive session on Thursday, pulling back by more than 2%, and are trading right on their 200-day moving average. JBLU has been trading in bull market territory consistently since mid-December, and has earned “consider buying” rating of 9 out of 10.
The last time JBLU was as oversold as it is heading into Friday’s session, with the stock closing lower for multiple days in a row, trading oversold, and earning “consider buying” ratings was in mid-January. The four-day sell-off that took JBLU into technically oversold territory was followed by a rally during which the stock closed higher for 11 out of the next 13 days.
Another very oversold airlines stock is Delta Air Lines (NYSE: DAL). Shares of DAL have closed lower for four days in a row – the last three oversold – and are trading at new, short-term lows. Like US Airways Group above, Delta has earned our highest ratings of 10 out of 10 ahead of trading on Friday, and has developed a positive edge of just under 2% in the short-term.
DAL has been trading in bull market territory since the second half of January. The stock’s recent run into the beginning of February took DAL to its highest level in six months.
Be sure to read our latest from 7 Stocks You Need to Know: “Buying the Selling in Weight Watchers”.
David Penn is Editor in Chief of TradingMarkets.com