-- A BREAK FOR THE TRANSPORT ETF, AIRLINES, TRUCKERS, RAILROADS, DELIVERY SERVICES, 3 AIRLINE STOCKS, 2 TRUCKING STOCKS, OIL WEIGHS, OIL SERVICES HITS RESISTANCE --

TRANSPORT ISHARES BREAKS CHANNEL LINE... Some transportation-related industry groups and stocks are at interesting junctures right now. First, the broader market is in an uptrend as the S&P 500 hit an all time high last week. Second, oil prices remain weak and this is beneficial to several transport-related groups. Third, many of these stocks and groups hit 52-week highs in December and January. Some are even hitting 52-week highs here in February. After corrections in December-January, I am seeing upside price movements in February to indicate that the corrections are ending and the bigger uptrends are resuming. Today we will look at the Transport iShares, four related industry groups, several airline stocks, a couple of truckers and oil.

Chart 1 shows the Transport iShares (IYT) breaking above the channel trend line to signal an end to the correction and a resumption of the bigger uptrend. First, note that the big trend is up because IYT broke out in late October and hit new highs throughout November. After a ~20% advance in less than two months, the ETF was certainly entitled to a corrective period. Broken resistance turned into support as IYT bounced off the green support zone three times. I also drew some internal trend lines to define the correction and highlight the falling channel. Note that these internal trend lines pass through some of the intraday spikes. With the February surge, IYT is making a bid to continue the bigger uptrend and challenge its November high. The indicator window shows the StockCharts Technical Rank (SCTR) holding above 60 since mid October and above 70 in February. This means IYT is one of the stronger ETFs in our ETF universe, which excludes inverse and leveraged ETFs.

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Chart 1

AIRLINES LEAD AND TRUCKERS BREAK OUT... The transport group can be divided into four sub-groups: airlines, trucking, railroads and delivery services. FedEx (FDX) and UPS dominate this last group. Chart 2 shows the Dow Jones industry group ETFs representing these four groups. The DJ US Airline Index ($DJUSAR) is the strongest of the four. It hit a new high in late January and did not break its mid December low. The DJ US Trucking Index ($DJUSTK) fell back in January, but broke out with a surge over the last two weeks. This group looks especially promising because the wedge is typical for a correction within an uptrend and a 50-62% retracement is normal for a pullback. The DJ US Railroad Index ($DJUSRR) broke out in early February and looks strong as well. The DJ US Delivery Services Index ($DJUSAF) was hit hard after a warning from UPS, but the index bounced off broken support and I still think the cup is half full for this group.

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Chart 2

THREE AIRLINE STOCKS... The next charts will focus on three stocks from the airline group. Chart 3 shows American Airlines (AAL) breaking out to new highs with a gap in late November. Yes, you know what is coming next. This new high means the long-term trend is up and declines are viewed as corrections within this bigger uptrend. The gap zone held from December to February, and the stock held above the broken resistance zone. AAL turned up last week and broke short-term resistance at 50.

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Chart 3

Chart 4 shows Southwest Airlines (LUV) surging to a new high in mid January with a gap above 43. The broken resistance zone turned support and held in February as the stock bounced the last four days.

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Chart 4

Chart 5 shows Skywest (SKYW) with one of the stronger patterns in the group. The stock broke out to new highs in late December, and then forged new highs again in late January and February. SKYW shows a series of rising peaks and rising troughs since December. Even though the stock is now at the upper trend line of a rising channel, I would not consider this resistance. The channel is merely to illustrate rising prices.

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Chart 5

TWO TRUCKING STOCKS... The next charts focus on two stocks from the trucking group. Chart 6 shows CH Robinson (CHRW) with a lot of volatility the last three months, but a support zone and two selling climaxes. First, note that the stock broke out to a 52-week high in October and hit another new high in December. Despite recent volatility, the stock held support in the 68-69 area from late October until early February. The two declines this year occurred on big volume and could mark selling climaxes of sorts. Note that CHRW firmed after the early February plunge and moved higher the last two weeks.

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Chart 6

Chart 7 shows JB Hunt (JBHT) with a big breakout in late October and new highs into late December. As with CHRW, trading turned volatile after the breakout, but the breakout zone ultimately held as this stock bounced off the support zone. A triangle formed from late December to February and the stock broke triangle resistance with a surge last week.

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Chart 7

VIDEO BONUS... The following airline stocks are also covered in today's video: Air France (AFLYY), Allegiant Travel (ALGT), Alaska Air (ALK), Copa Airlines (CPA), Delta (DAL), Hawaiian Airlines (HA), JetBlue (JBLU) and Spirit Airlines (SAVE). Link for today's video.

OIL WEIGHS ON OIL SERVICES ETF... Oil was down around 3% today and this weakness is extending to the energy-related ETFs. Chart 8 shows the USO Oil Fund (USO) hitting resistance in the 20 area three times and falling to range support in the 18 area. The ETF has bounced between 18 and 20 the last three weeks and remains in a short-term trading range. This is an important test for oil because a break below the February lows would suggest that the bigger downtrend is reasserting itself. The indicator window shows RSI hitting resistance in the 50-60 zone throughout February. A break above 60 is needed to turn momentum bullish again.

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Chart 8

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Chart 9

Chart 9 shows the Oil Services ETF (OIH) hitting new lows in January and then bouncing to the 37 area in mid February. With a new low just a few weeks ago, this bounce is considered a counter-trend move and the long-term downtrend is expected to take over at some point. OIH hit resistance from the mid December high around 37 and fell back from this resistance zone over the last few days. Chartists could still make an argument for a short-term uptrend (three weeks) with the February low marking first support. A break here would suggest a continuation of the bigger downtrend and target a move to new lows.

WEBINAR ... I will be doing a Webinar on Tuesday at 1PM ET. This webinar will cover recent breadth indicators, Treasury yields, Treasury bonds, utilities, REITs and much more. I will also answer questions on your favorite stocks and ETFs. Click here to register.