The Forty-Six Year Old Virgin

Founded in 1970 by Sir Richard Branson, Virgin Group has its hands in many industries and has done quite well for itself. 

Today, Virgin America (VA) is shooting higher again on buyout talk, perhaps by JBLU. Airlines, as a group, have been remarkably resilient for a while now. Another name to watch for buyout talk may very well be ALK, Alaska Airlines. 

But while that is playing out with airlines, within other areas of the transportation sector all is not well. 

The major railroads, after a reprieve in recent weeks in the firm of a relief rally, are now in danger of rolling back over. On the CSX daily chart, below, for the major rail, note how price is toying with losing its support trend since January. New bull trends have not yet been established for rails (still declining 200-day moving averages across the board). 

So, perhaps some pair trade ideas are setting up, via long buyout target airlines and short rails, in the transport sector. This pair trade thesis holds especially true if the indices remain benign.