DOW TRANSPORTS CLEAR THEIR 50-DAY AVERAGE -- JB HUNT AND CH ROBINSON ARE LEADING -- KANSAS CITY SOUTHERN, CSX, AND UNION PACIFIC ARE ALSO STRONG -- FEDEX CLEARS ITS 50-DAY AVERAGE -- THE DOW INDUSTRIALS ARE TESTING THEIR 50-DAY LINE AGAIN
DOW TRANSPORTS EXCEED 50-DAY AVERAGE ... Stocks are opening the new week on a positive note. Transportation stocks are having an especially strong day. The daily bars in Chart 1 show the Dow Transports climbing 2% this morning. More importantly, the $TRAN is trading above its 50-day moving average (blue circle). It also appears to be on the verge of rising above a falling trendline drawn over its January/March peaks. The transportation group bounced off its 200-day moving average just a couple of weeks ago (red arrow). Its relative strength line (top of chart) shows the group starting to outpace the Dow Industrials. The two groups leading today's rally are truckers and rails. Among delivery services, FedEx is also having a strong day.
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Chart 1
JB HUNT AND CH ROBINSON LEAD TRUCKERS HIGHER ... Chart 2 shows the Dow Jones US Trucking Index moving up to test its upper trendline in a potential triangular consolidation pattern. The index climbed above its 50-day average last week. Most of the credit for that bullish formation goes to C.H. Robinson Worldwide (CHRW) which is shown in Chart 3. The stock is moving up to test its all-time high reached in January. Chart 4 shows JB Hunt Transportation Services (JBHT) surging 7% today to clear its 50-day average. Railroad stocks are also having a strong day.
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Chart 2
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Chart 3
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Chart 4
KANSAS CITY SOUTHERN, CSX, AND UNION PACIFIC LOOK STRONG... Railroad stocks have been among the strongest transportation stocks this year. And today is no exception. Chart 5 shows Kansas City Southern (KSU) moving up toward its 2018 highs. Chart 6 shows CSX still below a falling trendline, but above its 50-day average. Chart 7 shows Union Pacific (UNP) moving up toward the top of a triangular consolidation pattern. All three charts have a bullish look to them.
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Chart 5
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Chart 6
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Chart 7
FEDEX ALSO CLEARS 50-DAY AVERAGE ... Chart 8 shows FedEx (FDX) climbing above its 50-day average in pretty decisive fashion. The stock is also testing a falling trendline drawn over its January/March highs. The FDX/SPX relative strength ratio (top of chart) is now trading at the highest level in nearly three months. And its daily MACD lines (below chart) have turned positive. Signs of strength in the economically-sensitive transportation groups are usually a good sign for the economy and the stock market. That includes the Dow Industrials which are undergoing a test of their own.
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Chart 8
DOW INDUSTRIALS ARE TESTING 50-DAY LINE AGAIN ... It's usually a good sign when the Dow Industrials and Transports are rising today. The Dow Theory is based largely on the premise that a strong stock market requires both of them to rise together. The Dow Transports have already cleared their 50-day average today. Chart 9 shows the Dow Industrials testing their 50-day line again (after backing off from it on Friday). The Dow is also struggling with a falling trendline drawn over its January, February, March highs. This is the fourth time that resistance line is being touched which makes it an important test. A decisive close above that trendline and its 50-day average would be a positive sign for the Dow and the rest of the market.
