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More pain could be ahead for these once-hot stocks

Airline investors have seen more than their share of choppiness lately.

The NYSE Arca Airline index has dropped 8 percent this year, after surging nearly 50 percent in 2014.

And according to technical analyst Ari Wald, airlines are set to lose a lot more altitude in the months ahead.

"I think we're at a stage now where we get a healthy shakeout, and I don't think we're through with this shakeout," the head of technical analysis at Oppenheimer said Tuesday. "I think it can be a rough couple of months."

Shares of Delta were particularly weak on Tuesday, dropping 2.6 percent after the company said it expects passenger revenue per available seat mile to fall 4 percent to 5 percent in the current quarter, compared with a previous projected decline of 2 to 4 percent.

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Alex Grimm | Bongarts | Getty Images

Earlier, Southwest announced plans to increase its capacity, and American Airlines responded by saying it would be forced to respond with more aggressive pricing.

Judging by the consequent declines in airline stocks, investors clearly took this as an indication that the "bad old days" are back for the carriers, with price wars depressing margins for the sector and ending the big airline rally.

Interestingly, Wald says the launch of a new airline ETF, years after the prior airline ETF shut down, is yet another sign that the airlines are "toppy."

"I think that shows that [the airline trade] has become a little bit popular. I think there's some froth in the industry and with that, there has been some breakdown in price," the technician said. "I see another 10 percent downside from here, so I'm staying away for now."

To be sure, not everyone is bearish on airline stocks. In a Monday CNBC interview, Cowen analyst Helane Becker predicted that the airlines would bottom in May.

"We think that over the next five weeks, we'll get better price performance, as the market starts to look ahead to better comps in the second half of the year," Becker said.