Airlines Continue to Out-Perform the Broader Market but is the Pace Set to Accelerate?

The chart below plots the ratio of the SPX vs. FAA (airline ETF).

Note that this week the ratio is breaking below support line (1) and seemingly falling back into a channel whose bottom is defined by line (2).

If the break is for real, the pace of the ratio’s decline could be set to accelerate given the lack of other noteworthy support that exists to stop it from targeting line (2).

Line (2) is ~20%-25% lower, implying airlines could out-perform by this margin vs. the SPX over the intermediate-term.

2012-12-18 Ratio - SPX vs. FAA - Weekly