Are the Dow Transports defying doom and gloom?

Pete, January 31, 2008 @ 4:25PM ET | Link | RSS | Read via Email | Start a Discussion  

31-trananimated.gifHave you noticed lately how quickly people’s emotions are changing day by day? Last week, it was doom and gloom and this week it’s relief that the Fed saved the day.

Everyone is glued to the financial media outlets listening to so-called experts talk about ‘this, that and the other thing’ AFTER the fact. It’s amazing.

Time is money, and your valuable time is better spent listening to what the market is saying.

While everyone is talking about the Fed, recession, unemployment, inflation, etc., something very interesting has appeared on our radar, standing out in these uncertain times: transportation.

Regular readers of our daily “Stocks to Watch” list will have noticed that companies involved in the trucking industry have been showing up on the winners list over the past few days.

Dow Theory followers should keep an eye on the Dow Transports. The index is made up of 20 companies, and four of these companies are in the Trucking Industry. If the index continues to tick up, it won’t be long before pundits and commentators latch onto this story and start quoting Dow Theory experts.

Let’s look at some recent media comments about trucking companies:

Media perception has been pretty negative towards the trucking industry, yet recent price action tells us otherwise. Bear Stearns analyst Edward Wolfe summed it up when he said, “We believe the stocks are heavily shorted, and with sentiment this poor, investors should have several opportunities to cover into weak earnings reports and 2008 guidance.”

Let’s take a look at the price action for some of the bigger trucking companies.


As usual, the price bars of our charts are colored according to the status of our relative momentum indicator. Red = underperform. Yellow = neutral. Green = outperform. The 200-day moving average was been added because it is a widely-watched line in the sand.

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Con-way Inc. (NYSE:CNW)

Wall Street firms have a rating of 2.00 on CNW which Reuters equates to an “Outperform“.

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J.B. Hunt Transport Services, Inc. (NASD:JBHT)

Wall Street firms have a rating of 1.88 on JBHT which Reuters equates to an “Outperform“.

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Landstar System, Inc. (NASD:LSTR)

Wall Street firms have a rating of 2.00 on LSTR which Reuters equates to an “Outperform“.

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YRC Worldwide Inc. (NASD:YRCW)

Wall Street firms have a rating of 3.15 on YRCW which Reuters equates to an “Hold“.

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Arkansas Best Corporation (NASD:ABFS)

Wall Street firms have a rating of 2.89 on ABFS which Reuters equates to an “Hold“.

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Forward Air Corporation (NASD:FWRD)

Wall Street firms have a rating of 2.83 on FWRD which Reuters equates to an “Hold“.

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Heartland Express, Inc. (NASD:HTLD)

Wall Street firms have a rating of 2.38 on HTLD which Reuters equates to an “Outperform“.

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Knight Transportation (NYSE:KNX)

Wall Street firms have a rating of 2.86 on KNX which Reuters equates to an “Hold“.

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Old Dominion Freight Line (NASD:ODFL)

Wall Street firms have a rating of 1.58 on ODFL which Reuters equates to an “Outperform“.

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Werner Enterprises, Inc. (NASD:WERN)

Wall Street firms have a rating of 3.00 on WERN which Reuters equates to an “Hold“.

In conclusion, we stress the importance of watching the price action within the context of The Sentiment Cycle. The reason to watch the trucking industry and the Dow Transports in general is because this sector says a lot about the state of and the health of the economy.

It will be interesting to see what unfolds in the coming weeks. Are the Transports telling us a different story of the economy’s health than the financial media?

We appreciate your continued support by visiting the blog daily!

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