Transport Drama Revs Up

This week may have brought the year's busiest shipping days for FedEx(FDX Quote) and UPS(UPS Quote), but the good news stops there. Transportation stocks are troubled.

FedEx posted an 8.5% increase in second-quarter earnings, but investors sold the stock on the company's third-quarter earnings guidance, which fell short of expectations. FedEx CEO and President Frederick W. Smith said the company expects "somewhat slower" growth in the second half of its fiscal year, but highlighted strength in its Asia operations and a decent holiday shopping season. But the damage was done: "FedEx expects slower growth" is what the market heard, and the ramifications of that statement can run far and wide.

Shares of FedEx slipped 1.9% Wednesday, while UPS fell 1.3% and the Dow Jones Transportation Average fell 1.14%. Meanwhile, the Dow Jones Industrial Average hit an all-time intraday high of 14,498.47, but missed making yet another closing high, finishing down 0.06% to 12,463.87. The S&P 500 fell 0.1% to close at 1423.53, and the Nasdaq Composite fell 0.08% to close at 2427.61.

The Dow just missed another all-time high and finished down a hair. So why are market professionals concerned about Wednesday's action?

Dow Theory suggests that the Dow Jones Industrial and the Dow Jones Transportation Averages should be moving in the same direction to confirm a trend. If they are moving in opposite directions, investors take heed, and worry that the divergence means the market can't sustain its current trend. Well, take notice.