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The Earnings Bar Is Hurdle for Transportation Stocks

NEW YORK ( TheStreet) -- The Dow transportation average gained momentum Tuesday in a technical move towards a test of its May 20 all time high at 6,568.41. What this has done is raise the earnings bar for the transportation sector, which still has a sector allocation rating of 'avoid-source of funds.'

I profiled these eight transportation stocks I have been following in Continue to Avoid Transportation Stocks. I have not changed this June 19 assessment and thus re-iterate that transportation stocks should be sold on strength.

The transportation sector consists of 182 stocks and only six have a buy rating. We show that 96 stocks are rated sell and another 47 are rated strong sell. With 78.6% of all stocks rated sell the 'avoid-source of funds' asset allocation weighting remains appropriate. On June 19 the sector had 74.9% of stocks rated sell.

The ValuEngine valuation warning continues with 74.0% of all stocks overvalued, and with 38.6% of all stocks overvalued by 20% or more. The transportation sector is 14.6% overvalued.

In today's table, all eight stocks are overvalued, all continue to be sell-rated, and six had double-digit gains of 13.2% to 51.2% over the last 12 months. The projected losses for the next 12 months range from down 5.7% to down 9.8%. All are above their 200-day simple moving averages which risks reversion to the mean.
[Read: <a target="blank" data-add-tracking="true" href="http://www.thestreet.com/story/11973544/1/good-luck-chasing-nike.html"><em>Good Luck Chasing Nike</em></a>]

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