Aviation Sector: Trends and Profit Strategies

It may be hard to believe, but we have already left the first half of January behind. The stock market found stability last week, took a step back, and then recovered on Friday to close the week. Meanwhile, we’re diving deeper into the earnings season for Q4, and the volume of reports is expected to increase significantly over the next few weeks. Typically, the pace of events picks up during this period as we update our investment models. Adding to this busy pace, we also have the “bonus” of President Trump’s inauguration, which is expected to bring a potential wave of executive orders. These will give us plenty to think about, along with the Federal Reserve, whose newly formed Federal Open Market Committee is preparing for its January meeting on monetary policy. As we move through these and other upcoming events, along with new economic data, we will analyze their impact on factors like the dollar, inflation, and the 10-year Treasury yields, which could affect our strategy and the market as a whole.

Given the huge volume of information flooding in, we will rely on a core principle: “measure twice, cut once” before taking action. More confirmations strengthen confidence, and we prefer this over the risk of being caught in a cycle of contradictory information. In short, we will stick to our plan – seeking opportunities in well-positioned companies with favorable risk-reward ratios while remaining disciplined investors as we do so. While the earnings season heats up, we will likely stay on the sidelines when it comes to deploying capital. This is because we want to test the “waters of earnings” when a broader range of companies begins reporting. This week also brings the inauguration day, meaning President Trump will start revealing his political agenda. We will mainly be in “gather and analyze” mode, but we’ll keep an eye out for any clear opportunities that may emerge.

Chart of the Week: US Global Jets ETF (JETS)

The US Global Jets ETF (JETS) covers all major airlines and some smaller carriers. The group has performed well since last summer, marking a rise of about 52% from the bottom achieved in early August. Notice the color change of the candles at the reversal on August 7th – still bearish, but with improvement. When the candles turned red (strong bullish) in early September, buyers started to flood the market. The gradual and steady movement in this ETF indicates the strength and price power of the major airlines.

Recent results from Delta Air Lines (which posted strong numbers and even better forecasts for 2025) reflect a strong economy, good pricing policy, and full flights. Despite wage growth, the sector remains one of the best in the S&P 500, with an A+ rating in the “Relative Strength” group. Technical indicators are very bullish, as expected for an ETF in a strong upward trend. The series of higher highs and higher lows is a textbook definition of an uptrend. The MACD (Moving Average Convergence/Divergence) is leveling out but now shows a buy signal. The money flow is steady, and the Stochastic (momentum indicator) remains bullish. The latest tests of the dynamics were successful. We expect this ETF to break toward $30 in the near future.