By Nicholas Santiago on March 30th, 2010 3:44pm Eastern Time
Much like everything else since February 5th, 2010 the Dow Jones Transportation average has rallied to new highs for the year. Transport stocks are a leading indicator because they include shipping by air, sea, and ground. When the transport stocks are rallying many traders believe that growth is taking place again and this is a positive for the major indexes.
Some leading transport stocks that have traded to new highs are the airlines. Companies such as Delta Airlines inc (NYSE:DAL), AMR Corp (NYSE:AMR), and UAL Corp (NASDAQ:UAUA) have all made new highs for the year and have really lead the transportation index higher. This can be viewed as a positive for the overall stock market. Package delivery airlines are also at new highs. Companies such as Federal Express Corp (NYSE:FDX), and United Parcels Service (NYSE:UPS) still look good on the charts and continue to trade higher. This is also a positive for the markets.
Here is the negative for the transport index and the overall markets. The trucking stocks and the shipping stocks continue to lag and many traders believe that these are the more important transportation stocks that should be leading the markets higher. Stocks such as Ryder Systems Inc (NYSE:R) topped out in October 2009 and currently still remains well below that high. Meanwhile YRCW Worldwide Inc (NASDAQ:YRCW) fights for it's corporate survival by trading at 0.54 cents a share today. The stock traded over $6.00 dollars in September 2009. Trucking has clearly not been a positive for this market.
Dry bulk shipping stocks have also been a negative for the markets. A couple of these leading names are well below their 2009 highs. The first leading stock that is lagging is Dryships Inc (NASDAQ:DRYS). This stock topped out in September around $8.00 and now trades at $5.90 a share. The second lagging dry bulk shipping name is Excel Maritime Carriers Ltd (NYSE:EXM). This stock topped out in July 2009 at nearly 10.00 a share. The stock is currently trading at $6.19 a share which is well below it's 2009 high. These two leading names are very negative for the major indexes.
As long as the Dow Jones Transportation Index (NYSE:IYT) is holding steady and near new highs everything is fine. If the airlines start to decline this is the signal that the overall market could be turning. There are still a lot of pockets of weakness in the transports and today I have pointed out a few of them. Watch the leaders as they usually will tell the tale.
Nicholas Santiago
Chief Market Strategist
www.IntheMoneyStocks.com
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