Dow Transports Overview

I can say I get excited when I look through my Transports stock watchlist. I see many stocks that will be heading higher soon. This group is currently acting as a leading indicator – they topped before the S&P in 2015, and bottomed before the S&P this winter. While nothing is certain in the market, I do love a good leading indicator.

The Dow Transportation Average consists of only 20 stocks. I like that because it is easy to run through all the components and determine which direction the overall index is likely to head. I ran through them all and here’s my take on the best looking ones.

The Index ETF itself:
Screen Shot 2016-10-30 at 4.36.42 PM.png
I see a rising 200 day moving average, an inverse head & shoulders, and clear resistance. Continued consolidation and this index is just waiting to take off. What I find even more interesting is the next chart below.

Transportation Index relative to the S&P500:
Screen Shot 2016-10-30 at 5.15.33 PM.pngThe support line from 2009 proved strong and held again. We broke out from the downtrend line from 2015. This outperformance is a big positive for US stocks going forward, especially after the election is over with. I don’t see much positive action happening before November 8th. After that game is on.

RailRoad Index:
Screen Shot 2016-10-30 at 5.23.38 PM.png
An inverse head & shoulder pattern has broken down. We failed to reach overbought, but still have a rising 200dma. Going to observe market action to see what happens next.

Airline Index:
Screen Shot 2016-10-30 at 5.26.06 PM.png
Rising 200dma, never hit oversold. I’d argue airlines had a nice correction and are gearing up for more gains ahead.

CHRW:
Screen Shot 2016-10-30 at 5.21.17 PM.png
Long term triangle building up here at ATHs. Has been in a bullish range for its entire trading years. Higher prices coming.

CSX:
Screen Shot 2016-10-30 at 5.30.04 PM.png
Maybe a messy Inverse Head & Shoulders, but with a rising 200dma I like it over the previous resistance area. Strongest rail stock out there.

EXPD:
Screen Shot 2016-10-30 at 5.31.47 PM.png
Absolute beauty. A 10+ year ascending triangle with a rising 200dma and a bullish range since 1998 (on the weekly). Probably my favorite component of the index.

FDX:
Screen Shot 2016-10-30 at 5.32.30 PM.png
Clear resistance at ATHs with a rising 200dma. Never hit oversold on the correction. I like it. Don’t worry about Amazon trying to get in the shipping game. Price pays.

UPS:
Screen Shot 2016-10-30 at 5.40.18 PM.png
Consolidating here at ATHs with a rising 200dma and yet to be oversold since 2009.

LUV:
Screen Shot 2016-10-30 at 5.37.25 PM.png
Nice consolidation pattern here at ATHs. Rising 200dma and has not been oversold since 2011. Looks like there was a big spike in down volume this week though so we will keep an eye on price action to see if that will prove meaningful.

There are definitely others that look okay, but they need more time to setup. I strongly feel these stocks above will be the leaders that pull the index higher.

Thanks.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s