trucking, shipping, airlines, transportation stocksBy Andrew Nyquist
Over the past couple months, the Dow Jones Transportation Average has been on fire. After testing it’s 38.2 Fibonacci retracement level multiple times last year, it pivoted and shot higher. Many transportation stocks have benefited and shown strength since. As well, the price action has helped propel the sector into a leadership role, pushing the markets higher.

That said, all good rallies require consolidation (i.e. a rest) at some point. And looking overhead, it appears that the Transports may get one sooner rather than later.

Now this doesn’t mean that transportation stocks are dead, or no longer investable (especially given their recent strength). Rather it points out that sector returns may be muted for a while if the index consolidates gains near resistance. And, as with any market, select stocks will outperform. After a rally of this nature, consolidation can last anywhere from a few days to a few weeks, but is usually healthy (as long as key technical levels are not breached).

Lastly, investors should also be on the lookout for a breakout higher. But note that a breakout would likely be much stronger after some consolidation. Any breakout over the next day or two would need to be monitored closely. Initial pokes into new territory after vertical runs can illicit pullbacks after a few days.

Below are charts of select transportation stocks and indices that I find of interest in the space, including FedEX (FDX), United Parcel Service (UPS), Dow Jones US Airline Index, and Delta Airlines (DAL).

Dow Jones Transportation Average – Daily Chart

Broke out of a 2 year downtrend in December. Now closing in on 2011 highs and lateral resistance. Montor the 5600 level closely.

transportation stocks chart analysis

FedEX (FDX) – Daily Chart

After bouncing off the 38.2 fib yet again, FedEx pivoted higher (or rather rocketed higher) and now finds itself nearing key resistance. One of the key transportation stocks to monitor.

transportation stocks, FDX chart analysis

United Parcel Service (UPS) – Daily Chart

UPS has some room before hitting resistance at 2012 highs. A bit of a laggard, considering that it is still 4 to 5 percent off 2012 highs.

transportation stocks, UPS chart analysis

Dow Jones US Airline Index – Daily Chart

Airlines have been strong and Still have some room. But 83-85 looks like an area that may give the index some trouble. Nice looking technical setup intermediate term with the rounded bottom and acceleration in place.

transportation stocks chart analysis

Delta Airlines (DAL) – Daily Chart

DAL is sitting just 3 percent below key resistance. Bulls would like to see a breakout and successful retest, but the breakout may be stronger if the stock consolidates first. Either way, keep an eye on the price action around this resistance line.

transportation stocks, DAL chart analysis

Postscript: United Postal Service was corrected to United Parcel Service.

Twitter:  @andrewnyquist and @seeitmarket

No position in any of the securities mentioned at the time of publication.

Not Investment Advice – Please read investment disclaimer.