The stock market is poised for a continued rally into January, with potential for some downward pressure between February and March. However, the overarching trend for 2025 suggests a positive close, creating a favorable environment for specific sectors and stocks to thrive. This analysis focuses on the airline industry, which exhibits strong relative strength within the S&P 500, signaling potential outperformance compared to the broader market. This positive outlook is further supported by the identification of three airline stocks among the top fifteen performers in a relative strength screen of the S&P 500 components.
A deeper dive into the S&P 500 sector groups reveals the airline group’s impressive ranking at number three in terms of relative strength. This indicates robust performance compared to other industry sectors, bolstering the case for investment in airline stocks. Moreover, a projection based on the industry group’s monthly price cycle further reinforces this positive outlook, pointing towards price appreciation throughout 2025. This convergence of positive indicators – strong relative strength within both individual stocks and the broader sector group, coupled with favorable price cycle projections – makes a compelling argument for considering airline stocks as potential investment opportunities.
Among the three top-ranked airline stocks identified, United Airlines has already experienced a significant price surge, potentially limiting its immediate upside. Therefore, Alaska Air and American Airlines present more attractive entry points for investors seeking to capitalize on the anticipated industry growth. Alaska Air, in particular, demonstrates superior relative strength compared to American Airlines, making it a primary candidate for further analysis.
Alaska Air’s charts paint a picture of a stock poised for a sustained upward trajectory. A seven-year downtrend in price has been decisively reversed, as evidenced by the monthly price strip. This reversal is further corroborated by the weekly and monthly relative strength indicators, which have also broken through their respective downtrends. While the monthly momentum indicator shows a series of higher lows, it’s important to note the absence of an overbought condition, suggesting room for further price appreciation. This combination of factors suggests that the current upward movement is not just a short-term fluctuation but rather the beginning of a longer-term trend, potentially driving the stock price towards the $60 mark in 2025.
Similar to Alaska Air, American Airlines also exhibits promising price action. Both weekly and monthly price charts reveal clear reversals of previous downtrends, signaling a shift in investor sentiment. Furthermore, the weekly relative strength indicator has broken through a three-year resistance line, reinforcing the positive momentum. Based on these technical indicators, a price target in the $22-$25 range appears achievable. The monthly price cycles for both Alaska Air and American Airlines project continued price appreciation through the spring and summer of 2025, offering a longer-term perspective on the potential upside.
In summary, the analysis of both individual airline stocks and the broader industry group points towards a favorable investment outlook for the airline sector in 2025. The convergence of positive factors, including strong relative strength, positive price cycle projections, and the reversal of long-term downtrends, suggests a sustained period of growth. While United Airlines may have already realized significant gains, Alaska Air and American Airlines present compelling investment opportunities with considerable upside potential. Alaska Air, with its stronger relative strength, is particularly attractive, while American Airlines also offers a compelling case for investment based on its technical indicators and projected price trajectory. Investors looking for exposure to the anticipated market rally in 2025 should consider these airline stocks as potential additions to their portfolios.
