TRUCKERS LEAD TRANSPORTS HIGHER -- JB HUNT, OLD DOMINION, AND KNIGHT-SWIFT TRANSPORTATION HIT RECORD HIGHS -- C.H. ROBINSON IS TURNING UP...LANDSTAR MAY BE NEARING UPSIDE BREAKOUT
RAILS AND TRUCKERS LEAD TRANSPORTS HIGHER... Wednesday's message showed the Dow Transports closing above their 200-day line for the first time since early June. Chart 1 shows them continuing to build on that upturn. Their relative strength ratio in the upper box has turned up as well, which suggests that transports are starting to do better than the rest of the market. They're not getting much help from airline stocks. Most of this week's gains have come from stronger rails and trucking stocks. Chart 2 shows the Dow Jones US Railroad Index rising further above its 200-day line today. Its relative strength ratio (upper box) is rising as well. Our main focus today, however, is on trucking stocks which are the real transportation leaders. Chart 3 shows the Dow Jones US Trucking Index surging today to another record high. Its relative strength ratio in the upper box is doing the same. That explains why several individual trucking stocks also show rising chart patterns.



TRUCKING LEADERS... Chart 4 shows J.B. Hunt (JBHT) gapping up to a new record today. The stock is the day's top percentage in the Dow Transports, and one of the top gainers in the S&P 500. The only problem is that the stock has already risen pretty far and has reached overbought territory as shown by its 14-day RSI line in the upper box rising over 70. Chart 5 shows Old Dominion Freight (ODFL) in a similar situation. Strong but nearing overbought territory. Chart 6 shows Knight Swift Transportation (KNX) also in a strong uptrend but not yet in overbought territory. KNX is also closer to its recent breakout point near 40.



C.H. ROBINSON AND LANDSTAR ALSO LOOK PROMISING...The next two charts show a couple of trucking stocks that have lagged behind the group but have promising chart patterns. Chart 7 shows C.H. Robinson (CHRW) rising today to the highest level since last October. The stock has also risen above a falling resistance line drawn over its 2018/2019 highs (see circle). Its RS line in the upper box appears to be bottoming as well. Chart 8 shows Landstar Systems (LSTR) challenging its early 2020 peak near 119. A decisive close above that chart barrier would boost the stock to the highest level in nearly two years. Its RS in the upper box appears to be bottoming.


WHY IT'S BETTER TO LOOK BENEATH THE SURFACE... The charts in this message highlight why it's important to look beneath the surface of any market index. The Dow Transports, for example, have been one of the year's weakest groups. A glance at their chart might cause the casual observer to conclude that there wasn't much going on in the group. The charts shown above, however, show trucking stocks (and rails to a lesser extent) having a much stronger year. So have delivery stocks like FedEx and UPS. Weak airline stocks are primarily responsible for holding the transports back. Which is why it's important to look at leading stock groups (and stocks) within any given sector or index. Sector leaders can found on the Sector Summary page like the one show below for the Industrial SPDR (XLI). Chart 9 shows Trucking and Railroads leading the XLI on Friday (while Airlines are its weakest group). Rails and truckers are also helping make industrials the week's strongest market sector. Industrials and transports were part of this week's rotation out of technology stocks into more value-oriented market groups.
