TRANSPORTATION INDEX BREAKS 50-DAY AVERAGE -- RYDER REACHES NEW RECORD -- AMR BACK OVER 200-DAY AVERAGAE

DOW TRANSPORTS TURNS UP... Last Friday I talked about how the drop in oil was giving a boost to the Dow Jones Transportation Average and was helping it bounce off its 200-day moving average. Earlier in the week, I showed the Transports testing their 50-day moving average. Chart 1 shows the Dow Transports ending the week well north of that former resistance line. Percentage-wise, transportation was the strongest of the Dow averages on Friday. The rise in the relative strength line also shows new leadership by this cyclical sector. I recently suggested that an upturn by the transports would give a boost to the Dow Industrials. Interestingly, the two weakest market sectors were the transports and the Nasdaq. Both bounced off their 200-day lines and are now showing market leadership.

Chart 1

RYDER SYSTEMS HITS RECORD HIGH... Ryder has been the leader in the transporation sector. Its monthly chart shows the stock moving above its 1998 high to reach a new record. Four other transportation leaders that are close to record highs are Alexander & Baldwin (Chart 3), FedEx (Chart 4), JB Hunt (Chart 5), and CH Robinson (Chart 6). Although airline stocks bounced during the week, they remain the laggards in the transportation group.

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AIRLINES REMAIN LAGGARDS -- AMR OVER 200-DAY LINE... The Airline Index had a nice bounce this week and helped alleviate downside pressure on the transports. As a group, however, the airlines have been transportation laggards. The airline relative strength line has been dropping versus the transports for the last six months. As of Friday, AMR was the only airline stock that had climbed back over its 200-day average. With most transportation attention focused on a weak airline sector, a lot of investors may not be aware that other stocks in the group are doing extremely well. Those are the ones plotted above.

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