LUV has rallied out of a big base

Southwest Airlines (LUV) has rallied out of a 3-year big base on the move above 38.27-37.96 (38.2% retracement of the 2021-2023 decline and mid 2025 peak) to test the 50% retracement at 43.33. Dips that hold above or near the 38-37 area keep the big base breakout intact and pattern bullish for LUV with additional upside potential to 48.38 (61.8% retracement) and 54 (pattern count).

LUV is attempting to break out from a mid 2024 into late 2025 bottoming pattern relative to the S&P 500 (SPX). A decisive push higher would suggest a more enduring leadership trend for LUV with the potential for the stock to surpass its declining 200-week moving average vs. the SPX.

United Airlines (UAL) is attempting to confirm the bullish cup and handle highlighted in last week's The Stock Pulse, and the U.S. Global Jets ETF (JETS) has already broken out from the bullish cup and handle pattern flagged in the December 8 The Sector Edge.

Chart 1: Southwest Airlines (LUV) (top) and relative to the S&P 500 (bottom)