DOW TRANSPORTS NEAR NEW RECORD -- FEDEX IS THE DAY'S BIGGEST WINNER -- AIRLINES ARE STARTING TO HELP -- SOUTHWEST AIRLINES TESTING JUNE HIGH
DOW TRANSPORTS NEAR RECORD TERRITORY...The weekly bars in Chart 1 show the Dow Transports rising above their late 2019 peak and challenging their 2018 intra-day peak at 11623. A close above that level would put the Dow Transports in record territory. Their relative strength ratio in the upper box shows the group doing better than the rest of the market over the last four months after lagging behind for most of the last year. Most of those gains have come from rails, truckers, and delivery service stocks. FedEx (FDX) is today's biggest winner with the delivery stock trading at the highest level in two years. Airline stocks had been holding the transports back. But airlines have now risen to three month highs and are contributing to this month's gains in the transportation group.
FEDEX NEARS OLD HIGH...Fedex (FDX) is today's standout performer in the Dow Transports. The weekly bars in Chart 2 show FDX trading at the highest level in two years and nearing a test of its previous highs set during 2018. Its relative strength line in the upper box show the big delivery stock turning up during May and outperforming the market by a wide margin since then. United Parcel Service (UPS) has already hit a new record as has the Dow Jones Delivery Services Index. So have the Dow Jones Railroad and Trucking Indexes. The only one not to to do are airlines. But even those market laggards are starting to contribute to the transportation rally.
AIRLINES INDEX STARTING TO CLIMB... Airlines have been the biggest drag on the Dow Transports. The daily bars in Chart 1, however, show the Dow Jones US Airlines Index rising to the highest level in three months. But it remains well below its 200-day moving average and its June peak. And would have to clear those resistance levels to signal a new uptrend. One encouraging sign, however, is coming from the solid gray area which shows the airlines/S&P 500 ratio rising over the last two months and reaching the highest highest level since June. A glance at the individual airline charts shows one that may be already achieving an upside breakout.
SOUTHWEST AIRLINES CLEARS 200-DAY LINE... The daily bars in Chart 4 show Southwest Airlines (LUV) rising above its 200-day moving average today and challenging its June intra-day high at high at 42.35. If it clears that June barrier, it will the first airline stock to do so. Chart 5 shows JetBlue (JBLU) in the process of testing its red line. Alaska Airlines and Delta aren't far behind. Although airlines are still the weakest part of the transportation group, their recent rise is contributing to and helping to broaden out the transportation rally. And increases the odds for a new record in this economically-sensitive stock group.
