These airlines are going down correctly on the storm closings, but incorrectly if oil keeps plummeting.
This is a classic example of short- vs. long-term thinking.
I think that the airlines have earned enough street cred that after they fall, we will look at their chief operating cost -- oil -- and realize that they are bargains.
I see Southwest Airlines (LUV) , in particular, as being a terrific opportunity. Just a couple of weeks ago, we read research that suggested that Warren Buffett, who made some big investments in this group, might buy Southwest the way he bought Burlington Northern.
I don't think that's right, but $59 down to $53 seems pretty attractive. Delta Air Lines (DAL) , another Buffett fave, has gone from $52 to $46.
Is this the moment that you have to start buying, given the decline in oil? I think you could get started. They are cheap, they are down and they have already discounted a lot of negatives.
The only thing that is worrisome? These are momentum stocks, with lots of chartists.
LUV has made a strong rally since September, so a pullback should not be a total surprise. The stock should probably retest the chart support in the $52 to $50 area where it stalled in December and January. (See Bruce's full analysis of LUV here.)
DAL made a new low for the move down today. It could reverse back to the upside, but for now it looks like the flight plan is headed lower, perhaps as low as $42 in the weeks ahead. (See Bruce's full analysis of DAL here.)