Stock Chart Analysis DJ Transports

Posted by downtowntrader | 11/30/2009 09:56:00 PM View Comments

Stock Chart Analysis Dow Jones Transports Average

While all the recent attention has been on the dollar, financials, commodity stocks and metals, the transports have quietly put themselves in a very interesting position based on the daily chart. In looking at the Dow Jones Transports Average, you can see that the index remains in a trading channel that has been developing since its July breakout. The transports have respected the prior base as support on a few occasions, most recently on the early November pullback. The index has also backed off the 4050 level three times, possibly setting up a small triple top. While the triple top is certainly possible, you could also easily point to a broadening wedge which is often simply a consolidation pattern. Often in these cases, its best to weigh what we know and what levels are of importance moving forward.

  • Currently this index is trading above rising 20,50, and 200 day moving averages
  • The index has respected support a few times, but remains in a lateral range.
  • The breakout level would be above 4050ish
  • A break below the 20 and 50 day moving averages would be near term bearish with a possible move to the bottom of the range
  • The index remains in a trading range until the 3546 low is violated.

What I found interesting is that there are several stocks in this group that have perked up recently. For example, some of the airlines are starting to turn higher and the rails have maintained some strength after the Buffet buyout of BNI. Here are some possible stock ideas for trading this sector on continued strength:

FedEx Corporation (Public, NYSE:FDX)
Norfolk Southern Corp. (Public, NYSE:NSC)
UAL Corporation (Public, NASDAQ:UAUA)

Good Trading,


blog comments powered by Disqus