UPSIDE GAPS IN FEDEX AND UPS BOOST TRANSPORTS -- A REBOUND IN AIRLINE STOCKS IS ALSO HELPING -- BOTH GROUPS ARE ALSO CONTRIBUTING TO THE XLI

John Murphy
by John Murphy,
Pioneer Technical Analyst

DOW TRANSPORTS NEAR TEST OF 200-DAY AVERAGE...Transportation stocks are off to a strong start this morning.   Chart 1 shows the Dow Transports rising to a two-week high after bouncing off their 50-day moving average last week.   They may be headed for a test of their 200-day moving average.  Tranportation stocks have been lagging behind the rest of the market mainly due to weaker airline stocks.   They're getting a lift from airlines this morning.   Most of their gains, however, are coming from delivery stocks, and Fedex in particular.

FEDEX GAPS TO FOUR-MONTH HIGH... The daily bars in Chart 2 show  FedEx (FDX) gapping sharply higher this morning to the highest level in four months.  It has broken through its 200-day moving average in decisive fashion, and is now challenging highs reached during the first quarter.  Its longer range chart also looks promising.

LONG-TERM DOWN TRENDLINE BEING BROKEN... The weekly bars in Chart 3 show that the stock has been in a downtrend since the start of 2018.  Today's rally, however, has pushed the stock above a falling trendline extending back two years.  In addition, its 14-week RSI line (upper box) has risen above 50 by the most in two years; and its weekly MACD lines in the lower box look positive.   UPS is also having a strong chart day.

Chart 1
Chart 2
Chart 3

UPS NEARS FOURTH QUARTER HIGHS... The daily bars in Chart 4 show United Parcel Service (UPS) also gapping higher this morning.  The stock has already reached previous highs reached during the fourth quarter of last year.  The weekly bars in Chart 5 show the stock now in position to test those earlier highs.   Its weekly RSI and MACD lines are also positive.   Airline stocks, which have been the weakest part of the transports, are also rebounding today and lending support to the tranportation group.   Stronger transportation stocks are also lending support the Industrial SPDR (XLI).     Five of today's biggest percentage gainers in the XLI are delivery stocks (FDX and UPS) and airlines

Chart 4
Chart 5


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John Murphy
About The Author:

A trailblazer in intermarket analysis, John authored key texts that shaped technical trading and helped generations of investors decode market trends using charts and correlations. Learn More 

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