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Buy Airline Stocks as They Shrug Off Omicron Worries?

Airline stocks are trading pretty well despite the surging omicron variant. Let's look at how to trade the stocks from here.

Airlines stocks have done a good job shrugging off worries of the new Covid-19 variant, even as omicron has created a surge in positive cases. 

However, the market is either becoming desensitized to the news or investors are reacting to the fact that while case counts surge, hospitalization rates are not.

In reality, it’s likely a bit of both.

In any regard, airline stocks are shrugging off the new variant pretty well.

That’s even as there have been thousands of flights canceled over the last few weeks due to a shortage of workers.

For what it’s worth, cruise stocks are also doing an excellent job at shaking off the Covid-related news.

Are airline stocks finally ready to take flight?

Trading Delta Air Lines Stock

Daily chart of Delta stock.

Daily chart of Delta stock.

Despite a surge of omicron cases last week, notice how Delta Air Lines  (DAL) - Get Delta Air Lines, Inc. Report wasn't bad, just mixed. Last week, the stock was up two days and down three days, and finished lower by a paltry 56 basis points.

Hardly a panic despite the negative headlines — particularly for airline stocks.

Looking at Delta stock, shares are currently rotating over the $39.89 level. Not only was that a double-top resistance level, but it was also the December high.

So right off the bat on the first trading day in January, we have a monthly-up rotation in Delta in the face of bad news. I like that type of action. The key here is a sustainable rally. 

Put simply, we need to see Delta stock hold the ~$40 level going forward.

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If it can do that, the 200-day and 50-week moving averages are in play, along with downtrend resistance (blue line). Above that and the $45 to $46 zone is the next upside target.

On the downside, watch the 10-day and 50-day moving averages on the downside should Delta lose $39.89.

Trading Southwest Airlines

Daily chart of Southwest stock.

Daily chart of Southwest Airlines stock.

It’s hard to believe that Southwest Airlines  (LUV) - Get Southwest Airlines Co. Report hit new highs after the March 2020 selloff. Can it do so again?

Let’s aim lower, for now.

Shares are breaking out of a falling wedge (blue lines) and recently reclaimed the 10-day and 21-day moving averages, along with the weekly VWAP measure.

The stock is up in seven of the last nine sessions and is gunning for the 50-day. That’s the first target. The December high is the second upside target, up near $47.

If Southwest stock can clear this level too, then $50 is in play, followed by the 200-day and 50-week moving averages.

On the downside, I don’t want to see the stock lose its 10-day and 21-day moving averages or the weekly VWAP measure.

Trading United Airlines

Daily chart of United Airlines stock.

Daily chart of United stock.

Last but not least, we have United Airlines  (UAL) - Get United Airlines Holdings, Inc. Report. The stock looked good this morning, up over the key level of $45.58 and the 50-day moving average.

However, the stock has since lost some momentum and fallen back below both levels. If it can clear these marks again, keep an eye on $46.60 — last month’s high.

Above both marks could open the door to $50, along with the 50-week and 200-day moving averages. This would be a great trade opportunity for bulls, but they need to see the stock re-clear the key $45.60 level.

On the downside, a break below the 21-day moving average could put the $39 to $40 area back in play.