Nasdaq 2300 or Bust -- or 2300, Then Bust

Lower energy costs helped power the transports above my annual resistance at 3940 Thursday. On this strength, long-term investors should look to reduce holdings in the transports, particularly those trading near 52-week highs and within reach of longer-term risky levels. When I set my Power Scans to find transportation stocks with a hold or sell rating according to my model (at least 10% overvalued and trading within 5% of their 52-week high), three railroads are among the seven companies that come up:

Kansas City Southern (KSU Quote), which has monthly and quarterly risky levels at $23.90 and $25.08; Norfolk Southern (NSC Quote), which shows a quarterly risky level at $45.35; and Union Pacific (UNP Quote), for which my model shows semiannual and quarterly risky levels at $72.37 and $73.50.

Among the other names identified by the screen, Airtran Holding (AAI Quote), CNF Transport (CNF Quote) and Expeditors International (EXPD Quote) met the criteria, but could continue higher as there are no risky levels. Ryanair Holdings (RYAAY Quote) shows a semiannual risky level at $55.10.

One of the themes of my RealMoney columns is that since the economy is more dependent upon productivity gains achieved through technology, the Nasdaq should be looked at for leadership up or down. Older theories calling for transports to lead are still supported by many market strategists, but they are on the way out as the U.S. outsources manufacturing jobs and depends more on the service economy and technological advances. However, I do not detect a meaningful correlation between the Nasdaq and transports.