Part of the plight of bears since the March 2009 major bear market bottom can be attributed to the resilience of the transportation stocks. In particular, at virtually each juncture when the trannies looked to have been on the precipice of a total collapse they would firm up and sharply reverse higher. The monthly chart below (first chart) of the Dow Jones Transportation Average pretty well puts that resilience into context, as you can see price tightening up just below the major 5,400-5,500 resistance area dating back five years.
Bears will argue that this continued resistance since 2007 means the trannies are forming multiple tops. Usually, when a chart has reached a multiple top you will see a violent rejection the other way, confirming the idea of a major peak. Here, though, the bulls have continued to hold the line against that major rejection, and the presumption is that achieving a breakout above 5,500 will release plenty of pent-up demand.
With a rising 200 day moving average on the major indices and sectors, as well as the premier railroad, UNP, sporting an impressive chart (second, below, note rising 50 and 200 day moving averages with price tight and proper), positioning for another summer swoon is an increasingly difficult proposition despite the barrage of negative headlines and sentiment.
One thing is for sure, there is an awful lot of tension building on the long-term chart of the transportation sector.
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Looking at the weighting of the DJT: UNP, FDX and UPS make up 25% of the index.
FDX and UPS ( both having a good month ) look to be the key to busting out above 5,500.
FDX made Mr. Cajun’s top 100 list and will be a definite watch next week.
The trannies are echoing the Dow itself. Each confirming the other.
still keep tucking, IMHO
Think JBHT and UAL, both with earnings tomorrow, could be interesting tells?