Transportation Stocks Continue 2008 Outperformance

Rather quietly, Transportation stocks have continued their 2008 bull market.

The Dow Jones Transportation Average [DJTA] was created in 1884 and is the oldest U.S. Stock Index. The Index currently consists mostly of stocks in the Railroad, Shipping, Air Delivery, Trucking and Airline sectors.

A simple proxy for the DJTA is the ISHARES Dow Jones Transportation Average ETF (IYT) which does have Options trading available. Here are the Top 10 holdings of the IYT ETF as of 3/31/2008:

• BURLINGTN N SANTE FE (BNI)
• C.H. ROBINSON WW (CHRW)
• C S X CP (CSX)
• FEDEX CORP (FDX)
• LANDSTAR SYSTEM (LSTR)
• NORFOLK SO CP (NSC)
• OVERSEAS SHIPHDLG (OSG)
• RYDER SYSTEM INC(R)
• UNION PACIFIC (UNP)
• UNITED PARCEL SVC (UPS)

These holdings comprise about 72% of the IYT, indicating that the ETF is rather focused and not overly diverse.

IYT Daily Chart with Regression Line, Acceleration Bands, Percent R

The above chart shows the Daily performance of IYT for 2008 year-to-date. The blue trendline is a Regression Line based on Daily Close - this clearly shows the overall underlying uptrend of Transport stocks. In addition, the stock/ETF has been holding above the middle of the BigTrends Acceleration Bands (purple line) and also has held the bottom Band on pullbacks. Also, the Percent R readings in the bottom of the picture show that IYT has shown strength most of the year, and has had several successful re-tests of the key 80 area.

Overall, I see this bullish trend as likely to continue, and would look to accumulate on pullbacks towards the middle Acceleration Band (currently around 89 and rising) and on Percent R re-tests below 80. Downside should be limited to the bottom Acceleration Band, around 83 currently.

Comments

[low:]

A common sense assessment says, these trends should hold true. So glad it occured to me to look at the CANAMEX connection in advance to the squeeze play that has to be coming! Think I'll be nesting in this area awhile for welcomed insights.

2008 May 05 06:09 PM