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Are Airlines Stocks Cruising Smoothly or Hurtling to Earth?

NEW YORK (TheStreet) -- I don't ever remember airline stocks as momentum plays, but the seven we profile today are flying at elevated altitudes. Five are achieving parabolic orbits that will be difficult to sustain.

Lately it seems like airline stocks have been headed for the stratosphere, but they will likely return to "cruising altitude" -- their 200-day simple moving averages -- at some point this year.

We crunched the numbers to help you decide if and when to invest. Here are the profiles for seven airlines, and our two "Crunching the Numbers" tables follow.

Alaska Air (ALK) ($90.81) is up 23.8% year-to-date, but is down 5.4% since setting a parabolic all-time intraday high at $95.98 on April 2. An early warning is that the stock is below its 21-day simple moving average at $91.67. The 200-day simple moving average is at $71.21.

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The weekly chart is positive but overbought, with its five-week MMA at $88.20. This parabolic began in December 2009, when the stock moved above its 200-week SMA, now at $43.53. Quarterly and semiannual value levels are $86.98 and $71.68, with a monthly pivot at $92.91 and this week's risky level at $99.23.

Delta Airlines (DAL - Get Report) ($33.51) is up 22% year-to-date, but is down 8.2% since setting a parabolic all-time intraday high at $36.52 on April 2. An early warning is that the stock is below its 21-day SMA at $34.21. The 200-day SMA is at $26.58.

The weekly chart is neutral, with its five-week MMA at $33.15. This parabolic began in December 2012 when the stock moved above its 200-week SMA now at $14.44. A quarterly value level is $31.77, with weekly and monthly risky levels at $35.30 and $36.39.

Hawaiian Air (HA) ($13.22) is up 37.3% year-to-date, but is down 10.4% since setting a parabolic all-time intraday high at $14.75 on April 2. An early warning is that the stock is below its 21-day SMA at $13.89. The 200-day SMA is at $9.10.

The weekly chart is positive but overbought, with its five-week MMA at $12.80. This parabolic began in July 2013, when the stock moved above its 200-week SMA now at $6.61. Monthly and quarterly value levels are $12.71 and $11.56, with this week's risky level at $15.52.

JetBlue Airlines (JBLU) ($8.75) is up just 2.5% year-to-date, and is down 7.4% since setting its 2014 intraday high at $9.45 on Jan. 22. This airline is cruising above its 21-day and 50-day SMAs at $8.71 and $8.72, with its 200-day SMA at $7.70.

The weekly chart is neutral, with its five-week MMA at $8.70. Semiannual value levels are $7.89 and $7.39, with a quarterly pivot at $8.80 and monthly risky level at $9.53.

Southwest Air (LUV - Get Report) ($23.51) is up 24.8% year-to-date, but is down 3.8% since setting a parabolic all-time intraday high at $24.45 on April 2. An early warning is that the stock is below its 21-day SMA at $23.67. The 200-day SMA is at $17.65.

The weekly chart is positive but overbought, with its five-week MMA at $22.84. This parabolic began at the beginning of 2013, when the stock moved above its 200-week SMA now at $12.17. Quarterly and semiannual value levels are $21.81 and $16.98, with weekly and monthly risky levels at $24.45 and $24.53.

Spirit Airlines (SAVE) ($56.62) is up 24.7% year-to-date, but is down 11.4% since setting an all-time intraday high at $63.89 on March 25. An early warning is that the stock is below its 21-day SMA at $60.18. The 200-day SMA is at $42.79.

The weekly chart is neutral, with its five-week MMA at $55.93. A quarterly value level is $48.78, with monthly and weekly risky levels at $60.74 and $67.32.

United Continental (UAL) ($43.31) is up 14.5% year-to-date, but is down 12% since setting a multiyear intraday high at $49.20 on Jan. 22. The cruising altitude has a base of $42.77 set on April 8, with the stock below its 21-day SMA at $45.00. The 200-day SMA is at $37.36.

The weekly chart is negative, with its five-week MMA at $44.19. Monthly and quarterly value levels are $42.99 and $42.57, with a weekly risky level at $44.30.


Crunching the Numbers with Richard Suttmeier: Moving Averages & Stochastics

This table provides the technical status for the stocks profiled in today's report.

There are five columns with moving average titles: Five-Week Modified Moving Average, 21-Day Simple Moving Average, 50-Day Simple Moving Average, 200-Day Simple Moving Average and the 200-Week Simple Moving Average.

The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with readings from Oversold, Rising, Overbought, Declining or Flat.

Interpretations: (Stocks below a moving average listed in red are below that moving average.)

Five-Week Modified Moving Average (MMA) is one of two indicators that define whether or not a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.

A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.

A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.

A stock with a neutral technical rating has a profile that is not positive or negative.

The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance and as a "reversion to the mean" over a rolling three to five year horizon. (Even Apple declined to its 200-week SMA in June 2013.)

The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three to five day horizon and vice versa.

The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.

The 200-Day Simple Moving Average is another technical support or resistance and I consider this level as a shorter-term "reversion to the mean" over a rolling six to 12 month horizon. (Even Apple tested or crossed its 200-day SMA in nine of the last 10 years.)


Crunching the Numbers with Richard Suttmeier: Earnings and Where to Buy & Where to Sell

This table presents the levels at which to buy on weakness and where to sell on strength.

EPS Date is the day the company reports their quarterly results.

EPS Estimate is the earnings per share estimate from Wall Street analysts.

Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.

Note: Investors who wish to buy a stock should use a good-until-canceled GTC limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.

At the time of publication the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

Richard Suttmeier is the chief market strategist at ValuEngine.com . Richard Suttmeier can be reached at RSuttmeier@Gmail.com.

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