By Nicholas Santiago on February 3rd, 2010 2:44pm Eastern Time
The Dow Jones Transportation Average(NYSE:IYT) is trading sharply lower today as a couple of leading trucking stocks had a negative reaction after their earnings report. The transportation index is extremely important to follow. This index is the barometer of business when it is all said and done. Most professional traders will want to know what the transportation index is doing everyday. Generally, if this index is strong the market is strong and when it is weak the market is weak. Many times when you see the market higher on the day and the transports are weak this is a signal of overall weakness in the market. The opposite of that is true when the market is weak and the transportation index is strong it is prudent to not look for too much to the downside in the market.
Today Ryder System Inc(NYSE:R), and C.H. Robinson Worldwide(Nasdaq:CHRW) both reported earnings that were worst than expected and the stocks are reacting poorly today. Ryder posted a profit of $8.2 million, or 15 cents a share, down from $10.6 million, or 19 cents a share, a year earlier. The revenue also fell to $1.25 billion from $1.34 billion. Their guidance was also lower than expected going forward.
Meanwhile, C.H. Robinson Worldwide reported earnings that were not much better. CHRW reported a profit of $87.7 million, or 52 cents a share, Slightly lower than $88.8 million, or 52 cents a share from a year ago. However, the revenue reported was slightly higher by $2.01 billion from $1.96 billion. They also noted that their margin comparisons will be challenging going forward.
While these stocks were downgraded from several major firms today it is telling us that 2010 could lead to challenging times ahead. If the transportation average cannot lead the markets higher who can? Since the mid- January market high the Baltic Dry index has declined sharply and this is telling us that the transport average is important for the entire global economy. The Baltic Dry Index is a number issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the Index tracks worldwide international shipping prices of various dry bulk cargoes.
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com
Comments
a bearish chart
30 min data plot.last signal was bearish