TRANSPORTATION STOCKS MOVE INTO HIGHER GEAR -- DOW TRANSPORTS NEAR TEST OF MAJOR RESISTANCE LINE -- CH ROBINSON AND JB HUNT ARE TRUCK LEADERS -- KIRBY CORP IS MARINE TRANSPORTATION LEADER -- UTILITIES AND REITS LOSE GROUND ON RISING BOND YIELDS
DOW TRANSPORTS NEAR TEST OF OVERHEAD RESISTANCE...After lagging behind the rest of the market for most of the past year, transportation stocks are starting to show new life. Chart 1 shows the Dow Jones Transportation Average surging more than 1% today to the highest level in more than a month. It's already trading above its 50- and 200-day moving averages; and is nearing a test of a falling trendline drawn over its April/July peaks. The solid line is a relative strength ratio of the Dow Transports divided by the Dow Industrials; and shows the transports doing better over the last couple of weeks. That's an encouraging sign for followers of Dow Theory. A number of individual transportation leaders are shown below.
CH ROBINSON, JB HUNT, AND LANDSTAR ARE TRUCKING LEADERS...Trucking stocks are the strongest part of the transportation group. And their charts reflect that strength. Chart 2 shows C.H. Robinson Worldwide (CHRW) gaining nearly 4% today and rising above a falling trendine extending back to last September. Chart 3 shows J.B. Hunt Transport Services (JBHT) rising to the highest level in eleven months; and also clearing a falling trendline extending back to last summer. Chart 4 shows Landstar (LSTR) reaching a four-month high and challenging a falling trendline of its own.
KIRBY CORP. TURNS UP... Although we don't cover them as much, marine transportation stocks are having a very strong day. Chart 5 shows Kirby Corp. (KEX) climbing 2.5% today to reach the highest level in two months. It's one of the biggest percentage gainers in the Dow Transports. Chart 5 also shows the stock finding support near a falling trendline that had been exceeded back in April. That broken red resistance line became a new green support line during August where the stock bottomed.
UTILITIES AND REITS LOSE GROUND..Interestingly, utilities are starting to lose ground just as transports are starting to gain. Chart 6 shows the Dow Jones Utility Average losing ground this week. The falling red line in the upper box shows the utilities losing ground against the transports for the first time since July. That suggests some rotating going on within the Dow family. Rising bond yields this week are starting to pressure dividend-paying stocks like staples, utilities, and REITs which had been market leaders. Chart 7 shows the Real Estate Sector SPDR (XLRE) in retreat as well as bond yields rebound and bond prices slide. Some of that money has rotated into energy and financial stocks; as well as the transports.
DOW JONES COMPOSITE INDEX CONTINUES TO GAIN...Today's final chart shows the Dow Jones Composite Average which includes 65 stocks from the three Dow Averages (30 from the industrials, 20 from the transports, and 15 from utilities). Chart 8 shows that Composite Index continuing to gain ground today after last week's upside breakout above its August trading range and 50-day moving average. That's an encouraging sign. So is the fact that the economically-sensitive transports are now contributing more than the defensive utilities which are losing ground this week. And the fact that the transports are gaining on the industrials. The Dow Industrials meanwhile are trading relatively flat but holding onto last week's upside breakout.
