Caution: U.S. Transports Show Negative Divergence With S&P 500

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Includes: CSX, FDX, IVV, NSC, SPY, UNP
by: StopAlerts

Rail, trucking and package delivery are among key indicators of business activity in the United States. The recent relative performance of transportation stocks and the S&P 500 suggests that stocks overall might be somewhat ahead of themselves, or perhaps set up for a correction.

  • $SPX = S&P 500 (proxies: SPY, IVV and VOO)
  • $TRAN = DJ Transports (proxies: IYT and XTN [XTN is equal weighted])
  • $DJUSRR = DJ Railroads (members CSX [CSX], Norfolk Southern [NSC], Union Pacific [UNP])
  • $DJUDTK = DJ Trucking (member J.B. Hunt [JBHT])
  • $DJUSAF = DJ Delivery services (members, Fedex [FDX] and UPS [UPS])

RELATIVE PERFORMANCE and ABSOLUTE PERFORMANCE of the S&P 500 AND TRANSPORTATION INDEXES

These three charts plot the ratio of the price level of each of several transportation indexes versus the S&P 500.

5 Years Monthly Relative

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5-Year Monthly Absolute

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The 5-year chart generally is outperforming the S&P 500 since the market bottom in 2009 until mid-2011, when it was basically flat with the broad index, and then under-performing in 2012.

1 Year Weekly Relative

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1-Year Weekly Absolute

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The 1-year chart more clearly shows the turn to negative relative performance in 2012 for all but railroads - and they too have turn down on a relative basis recently.

3 Months Daily Relative

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3-Months Daily Absolute

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The 3 month chart clearly shows that over the past month, the overall transports and railroad, trucking and delivery services components are in a down movement. That probably as a lot to do with the flattening of the S&P 500 in the same period.

Disclosure: QVM has positions in SPY and NSC as of the creation date of this article (August 29, 2012).

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