DOW TRANSPORTS RISE TO HIGHEST LEVEL IN TWO MONTHS -- FEDEX AND UNITED PARCEL SERVICE HIT NEW RECORDS -- NORFOLK SOUTHERN AND UNION PACIFIC LEAD DOW JONES US RAILROAD INDEX TO RECORD -- TRUCKING INDEX ALSO HITS NEW RECORD
DOW TRANSPORTS RISE TO TWO-MONTH HIGH... Recent messages have described the gradual improvement in transportation stocks since mid-August. It started with their ability to reclaim their 200-day average in late August, followed by a move back above their 50-day average earlier this month. Chart 1 shows the Dow Jones Transportation Average climbing to the highest level in two months today. The ratio of transports divided by the Dow Industrials (top of chart) has also been rising over the last month. That means that the transports are playing catch-up to the Dow which is in record territory. The rally is being led higher by rails, truckers, and delivery service stocks like FedEx and UPS. Airlines are bouncing today, but are transportation laggards.
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Chart 1
FEDEX AND UNITED PARCEL SERVICE REACH NEW RECORDS ... Chart 2 shows FedEx (FDX) breaking through its July high to reach a new record. Its relative strength line (top of chart) is also climbing. Chart 3 shows United Parcel Service (UPS) rising above its December 2016 high to reach a new record as well. Its relative strength line (top of chart) bottomed in late July and has since risen to the highest level in eight months. The Dow Jones US Delivery Services Index ($DJUSAF) is also trading in record territory (not shown). So are indexes of rails and truckers.
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Chart 2
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Chart 3
DOW JONES RAILROAD INDEX ALSO HITS RECORD HIGH... Chart 4 shows the Dow Jones US Railroad Index ($DJUSRR) moving into record territory today. It's being led higher by Norfolk Southern (NSC) and Union Pacific (UNP). Chart 5 shown NSC well into record territory already. Chart 6 shows UNP hitting a new 52-week high today. That puts the rail stock on track to challenge its early 2015 peak. Trucking stocks are also having a record day.
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Chart 4
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Chart 5
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Chart 6
LANDSTAR AND JB HUNT LEAD TRUCKERS TO NEW RECORDS... Chart 7 shows the Dow Jones US Trucking Index ($DJUSTK) also moving into record territory today. [In case you're counting, that adds up to three sub-transportation groups hitting new records today]. Chart 8 shows Landstar System (LSTR) already well into record territory. Chart 9 shows J.B. Hunt (JBHT) hitting a new record high in today's trading. Both of their relative strength lines (on top of each chart) are rising as well. The fact that three transportation groups are hitting new records bodes well for the transportation sector, and suggests that transports may represent one of the best values in the stock market. Airlines have been the main group holding it back.
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Chart 7
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Chart 8
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Chart 9
AIRLINES ARE TRYING TO REBOUND FROM OVERSOLD CONDITION... Chart 10 shows the relatively weak 2017 performance by the Dow Jones US Airlines Index ($DJUSAR). That Index undercut its March low in late August, and remains well below its moving average lines. The fact that its 50-day average remains below its 200-day line is another negative factor. The good news (if there is any) is that the index is starting to bounce from oversold territory (see 14-day RSI line on top of chart). And its daily MACD lines (below chart) have turned positive. With other transport groups doing so well, the transportation index may not need a strong liftoff from airlines to keep its rally going. But it would be better if they started to provide some upside support. Interestingly, one of today's biggest percentage gainers in the Dow Transports is American Airlines (2.5%).
