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Performance of the transportation sector is considered to be a leading indicator for the general market. It falls before the general market, and it bottoms before the general market, or so I have heard from analysts and chartists. So how is the sector performing in the current rally we're having since March low?
The chart plots two railroad companies, CSX (CSX) and Norfolk Southern (NSC), against two trucking companies, Federal Express (FDX) and UPS (UPS). The yellow line is S&P 500 Index.
One thing I noticed right away is that the transport bottomed on the same day as the market. It is not leading. At best, the performance of the trucking companies are in-line with the market advance. Also, trucking companies are outperforming the railroad companies, which still lag the market. So what is that telling?
Let me hazard a guess. Whatever glimmer of recovery that some experts are saying we are having, is indeed consumer led. Need for consumable goods are there, and maybe increasing. But demand for industrial raw materials that require railroad (crushed stones, wood and lumber) has not substantively increased.
I am not in any transport stock (I don't know them enough), but I'm watching, as one of the indicators for the general market. One good thing I can say about the sector is it is rising with the market. I would worry otherwise.
Both FDX and UPS are up for the day.
The chart plots two railroad companies, CSX (CSX) and Norfolk Southern (NSC), against two trucking companies, Federal Express (FDX) and UPS (UPS). The yellow line is S&P 500 Index.
One thing I noticed right away is that the transport bottomed on the same day as the market. It is not leading. At best, the performance of the trucking companies are in-line with the market advance. Also, trucking companies are outperforming the railroad companies, which still lag the market. So what is that telling?
Let me hazard a guess. Whatever glimmer of recovery that some experts are saying we are having, is indeed consumer led. Need for consumable goods are there, and maybe increasing. But demand for industrial raw materials that require railroad (crushed stones, wood and lumber) has not substantively increased.
I am not in any transport stock (I don't know them enough), but I'm watching, as one of the indicators for the general market. One good thing I can say about the sector is it is rising with the market. I would worry otherwise.
Both FDX and UPS are up for the day.
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