Transportation names have moved higher over the last few weeks, leading to improved technical pictures and interesting opportunities.
Planes, trains and automobiles bring some of the most recognizable brands to the table. Many of us will be familiar with the buy what you know trade, where are clients more inclined to want to buy the brands they are familiar with in their day to day. While this isn’t always the most prudent course of action, having an opinion on the names your clients see every day can help you connect with new prospects and help you navigate sometimes legacy positions with emotional attachment or large, baked-in gains, etc. Besides just being well known brands, the Dow Transport Theory suggests that the creation (via the Dow industrials) and subsequent transport of goods around the nation serves as a helpful barometer of true economic strength or weakness. While the exact definition of transports is different today than at other points in American history, there is certainly still weight to the argument. Whether you are traveling across country for business or ordering a late-night burrito, goods and services are still being exchanged.
Transports in general have largely been in a bit of a lull over this most recent bull market. While still positive, transports representative IYT has gained just 42% since the start of 2023, lagging behind the broader S&P 500 (+~79%) and more growth focused Nasdaq-100 (+~135%) quite handedly. Despite this, the near-term picture for the fund is at least conversationally interesting. From an absolute perspective, IYT held its bullish support line below current levels before breaking a quintuple top on its default chart. With the move higher, the fund broke to new highs. The recent move higher has also led to relative improvements, seeing IYT return to a near-term column of X’s against SPXEWI to open December. With that, the fund moved above a 4.0 fund score for the first time since falling through that mark in April 2024. The image below is the current technical set up for IYT, but similar commentary can be seen for a more focused part of transports, that being airlines via representative JETS. It also broke to new multi-year highs after trading largely sideways for the better part of the last few years. After breaking back into a positive trend in May, it has posted a string of five consecutive buy signals on its default chart. All this to say, transports… via by air or by land… have improved and could be worth some exposure.
Airline blueblood Delta DAL could be one to add to on some normalization. Up nearly 11% so far this year, DAL most recently moved back to a 4/5 technical attribute score as it returned to a column of X’s on it’s RS test against its peer group. While it is a touch extended around current levels, those looking for focused exposure to a strong name within the sector could look to initiate/add at/around the low-mid $60’s.
