JETS ETF: Bulls Try To Take Charge, But Patience Needed

One of the hot re-opening trades during the last few months of 2020 through early 2021 was airline stocks. The notion that travel would rebound after the shutdowns made sense. Moreover, immense stimulus, both fiscal and monetary, put cash in would-be flyers’ pockets. And the ‘revenge’ travel theme played out in the economy. Unfortunately, shares of the major airline companies did not do so well.

The U.S. Global Jets ETF (NYSEARCA:JETS) topped out near $29 in the first quarter of 2021 but then embarked on a slow and steady descent to $16 by this summer.

JETS Fund Summary

For background, the U.S. Global Jets ETF provides investors access to the global airline industry, including airline operators and manufacturers from all over the world. The fund is nearly 40% in four stocks: American Airlines (AAL), United Airlines (UAL), Delta Air Lines (DAL), and Southwest (LUV), according to the ETF’s website. JETS has an inception date of April 28, 2015, and features an expense ratio of 0.60%.

Digging into the JETS portfolio, it’s a mainly domestic fund but does contain a material exposure to ex-U.S. markets. Also, the ETF flies a bit under the radar on the Morningstar style box – it is not a large-cap ETF, but a mid-cap value portfolio with a weighted-average market cap of $14.2 billion among its 51 holdings. So, it will certainly move differently compared to the S&P 500 which has a significant allocation to mega-cap equities.

JETS Portfolio

Morningstar also notes that the fund’s price-to-earnings ratio of 18.3 is slightly above that of the S&P 500 and at a material premium to the global equity market’s earnings multiple.

JETS could be about to move care of important dates on the calendar. According to Wall Street Horizon’s corporate event data, Delta Air Lines is expected to speak at Fal.Con 2022 held in Las Vegas from September 19-21. After that, American Airlines is slated to present at the Aviation Week Network’s Aerospace IT 2022 conference in Chicago on October 6-7.

After those events, earnings season begins with JETS’ big four names all reporting during the October 13-27 stretch. That period crosses over the October 21 monthly options expiration date.

Corporate Event Calendar: AAL, UAL, DAL, LUV

The Technical Take

JETS has been stuck in a prolonged downtrend dating back to early 2021. There’s a tradeable low in place, though. I see support near $16 from its June low and a potentially higher low made earlier this month at $16.66. Being long here with a stop under the June nadir could work.

Longer-term, however, the bears remain in control. The downtrend resistance line since March last year needs to give way to the bulls before an optimistic thesis going out months or years can be made. Shares are currently consolidating in a symmetrical triangle since the middle of the second quarter – a break above $19.36 could yield a target toward the downtrend channel line near $20. An advance above $24 would be a major bullish breakout – above the double-top pattern from the first half of 2022.

In summary, the bears might be losing their grip, but the onus remains on the bears to establish a decent uptrend.

JETS: Downtrend In Place, But Signs Of Reversing

Technical Take: Bonus Chart

It’s also important to recognize how JETS is performing versus the broad stock market. Since JETS is an international fund, with 21% of exposure being non-U.S., according to Morningstar, I used the Vanguard Total World Stock ETF (VT) as a proxy for the global stock market for relative strength analysis.

You might be surprised to see that JETS has not made new relative lows since its Covid bottom. It successfully tested that low at times earlier this year but is now breaking to a fresh three-month relative peak. This, too, suggests the bulls are beginning to gain some steam.

JETS Relative To The Global Stock Market: Three-Month High

The Bottom Line

Investors should not jump on board JETS quite yet. I see bullish turnaround signals, but the ETF’s absolute downtrend is still in place. That could change later this year. JETS is an ETF to have on your radar as we head through conference season and into earnings season.