This airline ETF is breaking out. How to trade it using charts
J-E-T-S… JETS, JETS, JETS! That familiar chant hasn’t been yelled with too much optimism in years for fans of the NFL’s perennial doormat – the New York Jets. However, for fans of the stock market looking for turnaround stories, the US Global Jets ETF (ticker JETS) may give investors a reason to cheer. Transports have been one of the best performing sectors over the last month. Both the Dow Jones Transportation Average and the iShares US Transportation ETF (IYT) are making 52-week highs. One reason for that strength has been the resurgence of the airline sector. Investing in airlines is not an ideal place for steady returns. They tend to be cyclical in nature. When they move, they tend to trend together. On this latest move higher, it’s been slow and steady. In fact, I believe we are just taking off to one of those pockets of smooth gliding that could last well into 2026. The JETS ETF is a great way of playing the airline sector without the individual stock risk. The top four holdings of the ETF make up 45% of the entire value of the fund. Those include Southwest (LUV) , American (AAL) , Delta (DAL) and United (UAL) . Three have broken out to new highs in LUV, DAL, and UAL and AAL has broken out to nine-month highs. The current move is giving us a great risk/reward entry point. The set-up Looking at the chart on a one-year daily basis we see a clear breakout to new highs. There was significant resistance around $27 which had been tested on multiple occasions. Price just pushed through this threshold and gives us favorable upside targeting. This breakout above $27 is critical and now will define our risk. Given the cyclical nature of the sector, new money rotating into the transports and looking at a longer-term chart there is quite a tailwind. The long-term set-up, as seen in a 10-year monthly chart below, gives us a defined and minimal target to the $33 area. That’s a 20% upside from current levels. Given the four-year base of this bottom, the longer-term potential could take the ETF to the low $40’s. The trade We want to remain long given the breakout. There is major resistance at the $33 level, but the current momentum should get us there over the coming months. Given the cyclical nature of airlines, we don’t think momentum is strong enough to break above this level quickly, but like the possibility over a longer time frame is promising. As for that downside risk, set your stops near the rising 50-day moving average. When the ETF trends higher the 50-day moving average has been a great support level and guide. If price falls below this level and cannot recapture $27 quickly then the near-term trade has failed. Overall, the JETS ETF gives us access to a part of the transports that has room to grow and is a great way to diversify into a sector that is just starting to take off. It also may be more entertaining to watch than the NFL Jets. – Jay Woods, CMT with Chase Games DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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