The famous phrase, "A rising tide lifts all boats," doesn't always hold true in the broad stock market. For example, in the past three months, while the S&P has lost about 10% of its value, agricultural chemical firms like Mosaic (NYSE: MOS) and Agrium (NYSE: AGU) have been on a hot streak.

Insert dovetail here
On the other hand, stocks in the same sector, like the two aforementioned companies, have a tendency to move in tandem. After all, stocks in the same industry generally derive their revenues from similar sources and are similarly affected when news, legislation, or an outside event occurs.

Each week, we'll take a look at the hottest sector over the past five days, according to SmartMoney's on-line "Sector Tracker," and then cross-reference the individual equities against investor data on Motley Fool CAPS, the Fool's free investing community. Using CAPS, we can get a better feel for what both individual and institutional investors are saying about these stocks.

A surprising sector
This week's top sector, believe it or not, is "Airlines," which is up 18% in the last five trading days. This group includes:

Company

5-day % price change

CAPS Rating (Out of 5)

Northwest Airlines (NYSE: NWA)

45.05%

*

Continental Airlines (NYSE: CAL)

28.99%

*

UAL Corp (Nasdaq: UAUA)

33.08%

*

Delta Air Lines (NYSE: DAL)

18.34%

*

US Airways Group (NYSE: LCC)

15.15%

*

Source: Smartmoney.com "Sector Tracker" and Motley Fool CAPS, as of 1/16/08.

Tough crowd ...
Not surprisingly, CAPS investors' sentiment toward airlines is very bearish. High debt, labor unions, terrorism concerns, and rising fuel prices are major obstacles that constantly hinder airline profitability. Indeed, many investors that have tested these waters before have learned tough lessons.

So what gave airline stocks their boost this week? The answer is quite simple: merger news. Just yesterday, Northwest confirmed merger talks with Delta, and some analysts are of the opinion that United and Continental will pair up, although Delta was also reportedly courting United, as well. Add in lower oil prices and you can see the result.

There are some fervent airline bulls on CAPS, including player HotStocksGG, who had the following to say about Delta last May.

Any company that can survive a hostile take-over threat, can emerge soundly from bankruptcy, and can still have so many frontline employees sacrificing for the company in the way they have, is most assuredly a company that knows how to survive. Even with the fuel prices increasing, with their new international routes and focus on customer service, Delta should come out a winner.

In this Fool's opinion, though, you should listen to the 81,000-person-strong CAPS investor community on this one. Unless you're an airline expert and can decipher the long-term benefit to common stock shareholders from all this merger talk -- or if you're just a straight-up gambler at heart -- it's probably best to sit out this airline rally.

Major airlines have been downright dreadful for long-term investors over the years, so if you're looking to generate better long-term returns, there are better options out there right now.

What do you think? Is industry consolidation the answer for the airlines or is it all for naught? Voice your opinion on Motley Fool CAPS, where 81,000 investors are waiting to hear what you have to say. Just click here to get started. CAPS is 100% free.

Fool contributor Todd Wenning wants to take a moment to remember the 1990 Cincinnati Reds World Series championship team, which, sadly, was likely their last. He does not own shares of any company mentioned. The Fool's disclosure policy is always a good buy.