I’m on the road for work this week…
I used Uber to get to the airport from my house. Then, I caught a Southwest Airlines flight. And once I got to my first destination, I took another Uber from the airport to the hotel.
During my trip, an Uber took me into the office each day. On the way out, that’s also how I got to the train station. Then, I hopped on a train and rented a car at my next destination.
In just two days, I used most of the major transportation services.
Now, I know I’m not single-handedly moving the Dow Jones Transportation Average. But I can tell you one thing…
Transportation is booming right now.
My airplane and train were packed. People filled the rental-car location at the airport. And a couple of the Uber drivers told me they’ve been going all over the place.
Back in April, I explained that the so-called “Dow Transports” was one of the last hurdles to jump before a big move higher in the stock market. And as you’ll see today, it paid off…
The following chart shows the two main parts of the “Dow Theory” that we talked about in April – the Dow Jones Transportation Average and the Dow Jones Industrial Average. Take a look…
Now, some readers will recall a key point I made about this chart in April…
If the Dow Jones Industrial Average and the Dow Jones Transportation Average make new highs together, it triggers this “continuation of trend” indicator. And as I said back then…
It means the economy is healthy. And in turn, it’s further proof that stocks are headed higher. In other words, it would be an “all clear” indicator for us.
Since then, both indexes have moved to “recent highs.” They haven’t made new all-time highs yet, but the trend is headed in that direction.
That tells me we can expect more gains ahead. After all, that’s how trends develop.
In short, the current setup proves the Dow Transports are alive and well. And judging from my own experience over the past week, I can see why…
Demand is still healthy. And as folks keep traveling, that will continue to be the case.
Even better, many transportation stocks are hitting new 52-week highs…
Shipping leader FedEx (FDX) and American Airlines (AAL) are some recent examples. And just yesterday, railroad Union Pacific (UNP) soared 10% after a strong earnings report.
That’s usually an indicator of strong economic growth in the U.S. economy.
Said another way, it’s a futile endeavor to fight the trend of the American people. And with new highs in sight for these two indexes, the Dow Theory is playing out in front of our eyes.
Good investing,
Pete Carmasino
