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12 Sell Downgrades Threaten Dow Transports

NEW YORK ( TheStreet) -- The Dow transportation average has been the leading equity average so far this year. At last Thursday's latest all-time closing high at 6,281.24, Dow transports were up a staggering 18.4% year to date. While this parabolic rally occurred the transportation sector became 23.7% overvalued at Friday's close, the highest reading for this measure so far in 2013.

Back on Dec. 24 I wrote, Transports Shift Into Fast Lane and my buy-and-trade strategies profiled six buy rated stocks in the Dow Transportation Average.

Then on Jan. 16 I wrote, Transports Are Truckin' Ahead of Earnings where I updated my buy-and-trade strategies for these six buy rated stocks in the Dow transportation average and added two more.

My theme today is that truckers are getting flat tires at the end of the road, that the railroads face risks of derailment, and that the air freighters could be grounded because of 12 downgrades to sell within the Dow Transportation Average.

Among the eight buy rated stocks on Jan. 16, four have been downgraded to hold ratings and four have been downgrade to sell ratings. As a bigger sector warning, the Dow transportation average does not have a single buy rated stock, but instead has eight rated hold, a dozen rated sell and one with a strong sell rating.

With the weekly chart profile of the Dow Jones Transportation Average (^DJT) pinned with an extremely overbought 12x3x3 weekly slow stochastic reading at 95.24, there is no longer a reason to own any stock in this sector. My semiannual and annual pivots are 5955 and 5925 with a weekly risky level at 6350. My lower annual pivot is at 5469.

Chart Courtesy of Thomson/Reuters

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Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

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