One of the most well-known oil derivative plays is to buy the airlines. Lower fuel costs help the companies extend their bottom lines and make the profit margins even higher. With this being said, just because you wouldn't be the first one to buy airlines with the oil thesis, doesn't mean that you can't profit from it. In fact, I think now is as good of a time as any to buy the airlines, because the unfortunate events across the globe have created travel woes.
There's no question that mixed feelings about safety are causing a decrease in traffic. However, I don't foresee this being a lasting problem. I expect traffic to return to normal quicker than people think. This opinion is what made me look at the airlines. Chart-wise, my favorites are Delta (DAL), Hawaiian (HA), and JetBlue (JBLU). As you may have guessed from the title, I see Delta as the crème de la crème.
In my opinion, the cup-and-handle chart is among the most reliable. Whenever I catch a good one, as in this one with Delta, I salivate a little bit; I know that these charts are the real deal. The cup-and-handle chart is almost always a precursor to higher prices. It is a natural consolidation during a stock's uptrend and, more importantly, is a continuation pattern. Delta has been in an uptrend for years, so a continuation of this would be a resumption of the uptrend. Seeing as this chart pattern is occurring on the monthly chart and the stock beautifully held its line of support, I think that it is safe to forecast months of strong performance. Delta will soon be a high-flyer once again.
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