Mexico and airlines led ETFs south Monday on fears the swine flu crisis could deepen the global recession.

The worst-hit industry, as tracked by Claymore/NYSE Arca Airline (NYSEArca:FAA – News), plunged 11% as the U.S. declared a public health emergency and discouraged nonessential travel to Mexico. The ETF experienced its steepest one-day dive since it started trading in late January. Volume swelled more than five times usual.

Two of the ETF’s largest holdings: Delta Air Lines (NYSE:DAL – News) and Continental Airlines (NYSE:CAL – News) nose-dived 14% and 16%, respectively, upon hitting overhead resistance at their 40-week moving averages.

FAA rallied 68% off its low over the past seven weeks vs. 31% for the S&P 500 and was due for some profit-taking. It reversed last week after failing to break prior resistance above 22. It may be forming a handle in a V-shaped base.

The pullback offers a buying opportunity in airlines, which should continue rising through May, according to Yiorgo Aretos, founder of the TMPProject.com.

He recommended buying airlines at the end of 2008. He also expected the market overall to pull back after rising for seven weeks.

Related Quotes

Symbol	Price	Change
CAL	11.08	-2.17
COW	30.10	-0.87
DAL	6.75	-1.13
EWW	30.73	-2.38
FAA	19.71	-2.32

Full Story: http://news.yahoo.com/s/ibd/20090427/bs_ibd_ibd/20090427etf

Related posts:

1. Strategic Shift: Even In China, Inflation Fears Are Receding (FXI, EFA, EWZ, CYB, CNY)
2. Investing: China Fears Much Ado About Nothing (FXI, GXC, YAO, EWH, HAO)
3. Are “Shale Oil Bubble” Fears Overblown? How To Profit (IOIL, DVN, CHK, TOT, OAS, UBS, COG, SWN, APC)
4. Morning Call: Italy Fears Send US Futures Tumbling
5. Marc Faber Fears Gold Confiscation From The Government (GLD, GDX, IAU, DZZ, SLV)

NYSE:COW, NYSE:EWW, NYSE:FAA