Takeaway

The presenter argues that Southwest Airlines (LUV) remains positioned for substantial upside following a resilient showing in the face of surging crude prices. Despite oil breaking above $100 and driving up jet fuel costs, LUV's refusal to break down indicated strong underlying buying support, prompting the presenter to maintain the bulk of a medium-term long position after locking in initial profits.

What the presenter said

• The presenter anticipated a rally in the airline sector, specifically identifying LUV as a primary opportunity.
• Despite oil breaking through $100 and pushing higher—which traditionally pressures airline margins via elevated jet fuel expenses—LUV exhibited notable relative strength and did not decline.
• This price resilience indicated that pullbacks would remain buoyant and precede a strong pop higher.
• The presenter added to the position on a shallow pullback and subsequently took partial profits yesterday, cashing in pieces at $38 and "$42 and change."
• The majority of the long position is still being held, with the presenter expecting LUV to trade significantly higher.

Trade ideas

• Southwest Airlines (LUV)
  • Direction: Long
  • Entry / Target / Stop: Entry: Unspecified | Target: Unspecified (partial gains realized at 38 and 42 and change) | Stop: Unspecified
  • Horizon: Medium-term
  • Conviction: High

Levels and data cited

• Oil: $100 (key price level broken to the upside)
• LUV: $38 (take-profit level where a portion was closed)
• LUV: "$42 and change" (take-profit level where a portion was closed)