Tags: transportation | sector | stocks | rail | earnings

Transportation Sector Rollin' Down the Bend

Transportation Sector Rollin' Down the Bend
(Michele ‘Mish’ Schneider)

By    |   Friday, 18 October 2019 11:46 AM

The Zacks Transportation Sector contains airlines, railroads, shippers and truckers to name a few. 

Earnings on many of the biggest names in that sector are happening now and throughout next week.

For example, J.B. Hunt and United Airlines reported already. Both stocks have jumped in price and are now digesting those gains.

CSX Corp. reported, too. That stock initially jumped in price but remains under the 200-day daily moving average (DMA) and resistance.

That makes me wonder about trucks, planes and cheap oil.

One of the largest U.S. trucking companies — KNX, or Knight-Swift Transportation — is expecting weaker earnings, reporting that overcapacity of big rigs is to blame.

Nevertheless, that might be priced in as that chart also looks decent.

Which brings me to the ETF IYT, or a reliable ETF for the transportation sector.

Why should bulls focus on this sector as we travel deeper into earnings season?

Look at these charts (CLICK HERE NOW).

FedEx (FDX), IYT’s third-largest holding, will not report until December. Under the most pressure of the aforementioned companies, FDX is in a bearish phase.

The daily chart on FDX shows the price climbing with the recent rally, but still under the 50-DMA (shown in blue).

On the weekly chart, FDX is also in a bearish phase and rather far from its 50-WMA (blue line).

On the left, IYT shows the strength this week has given it. The phase, accumulation, is positive and reflects optimism.

On the weekly chart, IYT has cleared the 50-WMA entering into a bullish phase.

The biggest weighted stock in IYT is Norfolk Southern Corp. (NSC), reports Oct. 23 before the stock market opens.

NSC, like FDX only a bit stronger, trades slightly below its 200-DMA (green line).

IYT now has support at 185-critical support.

The resistance level is 195-100.

If you compare this chart with the SPDR S&P 500 ETF (SPY) one, it tells a completely different story.

Even with the IYT’s move this week, considering the all-time high was hit in 2018 at 209.43, the performance is more like a steam train running low on coal as opposed to the Fortune 500 stocks that have run high on cheap money.

SPY is near all-time highs. IYT has $10 to go.

That is the disparity that worries me.

Will IYT catch up, or can it if SPY keeps running? Will IYT fizzle, reflecting a weaker U.S. economy?

As Johnny Cash sang:

I bet there's rich folks eatin'
In a fancy dinin' car
They're probably drinkin' coffee
And smokin' big cigars
Well, I know I had it comin'
I know I can't be free

But those people keep a-movin'
And that's what tortures me

Michele ‘Mish’ Schneider serves as Director of Trading Education at MarketGauge.com. For 20 years, MarketGauge.com has provided financial information and education to thousands. MarketWatch named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish won the Top Stock Pick of the year for RealVision. Follow her on Twitter at Michele Schneider @marketminute

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The Zacks Transportation Sector contains airlines, railroads, shippers and truckers to name a few. 
transportation, sector, stocks, rail, earnings
Friday, 18 October 2019 11:46 AM
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