By Nicholas Santiago on May 4th, 2010 3:22pm Eastern Time
Yesterday the Dow Jones Transportation Index made a new 52 week high. Many traders and investors will often key off the transportation index as a leading indicator for the health of the economy. Today the Dow Jones Transports Index ETF (NYSE:IYT) has declined by more than 4.00 percent. Today's sharp move lower on the index has now engulfed the prior 13 trading days on the daily chart to the downside. This is a bearish signal for the markets anyway you slice it or dice it.
Major leading air cargo transport stocks such such as Federal Express Corp (NYSE:FDX), United Parcel Service Inc (NYSE:UPS) are sharply by more than 3.00 percent. When these leading stocks decline, traders listen.
Rail road stocks such as Norfolk Southern Corp (NYSE:NSC) is another major transport name that has dropped today by more than 2.00 percent. Meanwhile, Ryder System Inc (NYSE:R) is a major trucking company that is trading lower by nearly 4.00 percent.
It is always important to follow the transportation average. When this index declines traders and investors will listen and pay attention. Transports have long been know as a leading indicator for the health of the economy. When the transports decline watch out below and trade with caution.
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