The Sector That’s Ready to Fly Away

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Oct. 25 (Bloomberg) -- On today's "Chart Attack," Strategas Research Partners Head of Technical Analysis Chris Verrone and Bloomberg's Adam Johnson look at momentum in the airline sector. They speak on Bloomberg Television's "Street Smart." (Source: Bloomberg)

People what a breakout looks like -- what you show people what a breakout looks like?

Airlines are telling us they want to be a leader, and they have omentum.

Given the seasonal dynamics of the broader market, we want a leader's trend and momentum.

We are showing you the s&p airline index, coming out of a 10 year base.

It is exhibiting leadership, as are most of the transportation names right here.

It sets a positive tone.

Up here on the top you have the airline index itself.

It down here you have the airline index relative to the s&p, the airline index divided by the s&p. exactly.

For the first time in 10 years, airlines are exhibiting leadership.

They are giving you returns in excess of that of the market, which is a big shift for these names.

We have got these nice arrows here.

It has taken a long time.

You are seeing the airlines start to finally break out on their own.

When you look at the individual names in the groups, jetblue, u.s. airways, southwest also coming out of really big basis.

The other story that is not getting enough attention is jet fuel, gasoline, and oil are all breaking down big-time.

Labor and jet fuel are the two highest costs.

It is jet fuel and labor.

When you look at what these stocks have been through the last decade, there's not a lot of believers yet.

Is not a lot of people who still believe in these names.

From a sentiment perspective, they're interesting here.

It has been hard to make money here.

It is like trying to make money on the refiners.

Supermarkets have the same story.

You feel this is an important breakout?

It's an important turn.

What you are seeing out of the airlines is reflective of transportation stocks globally this week.

We think airfreight, ups, that is reflective of things getting better.

In theory, you need the transportation sector as well as the industrial to develop simultaneously.

Airlines your top pick, or one of your favorites?

One of our top picks.

Look at media, discretionary is still a leader.

Technology, small cap industrials remain leaders in this market.

Why small-cap as opposed to large cap?

This leadership we have seen globally out of small caps is reflective that credit conditions are good and getting better.

If you look at borrowing costs in europe, multi-year lows.

He or brits beds in the u.s.,

This text has been automatically generated. It may not be 100% accurate.


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