The Transportation stocks are lining up on multiple timeframes to make a new leg higher it would appear. As market participants we know that a strong economy and by extension, a strong stock market should see shippers and carriers performing well.
If Train and Freight companies are delivering products in high quantity, it means companies that sell those products are seeing high demand from consumers spending discretionary income. All combine to suggest a strong underlying demand for goods and services we need or want for our daily lives.
It is my view that the Transport stocks are on the cusp of extending their rally significantly in the near future.
Should we see a resumption of trend above the $200 level, the next extension area sits near $250+.
A breakout here brings the prior highs into play quickly
There have been multiple tests of the higher end of the range. Those rally attempts were all rejected sharply and prices moved back to the support lows. Since the end of May sellers have not been able to reject prices as they did previously, this to me shows a strength.
It appears the sellers are wearing out and an upside resolution is imminent.
A couple names we hold in our Model Portfolios at zentrendstrading.com are UNP and ODFL.
Note that these leading names in the Transport group have already broken through their resistance and retested the area as support. Prices are now responding higher off of that retest.
We must always remember that a Sector or Index is not an entity on its own, but rather a group of individual underlying stocks. If these stocks are breaking out and leading the group higher, the odds increase that the Sector or Index will follow closely behind.
If you have interest in learning how to identify and manage this kind of multi-timeframe investing, please visit us as zentrendstrading.com.
We provide detailed Notes, Videos, and ongoing dialogue for our positions allowing members to follow along with our trades. Our process is designed to take advantage of large swings that occur in the market without having to sit in front of your computer all day long.
For questions or comments please contact me at email@example.com or on Stocktwits/Twitter @ZenTrends