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TheStreet Open House

Southwest Air, Con-Way, United Continental Lead Dow Transports to Teetering Highs

Stocks in this article: CNWDIA^DJTIWMRLUVQQQUALUNP

NEW YORK (TheStreet) -- There are 20 components in the Dow Jones Industrial Average (DIA) , but only five were the primary drivers that led this average to an all-time intraday high at 8537.80 set on Wednesday. Dow Transports has a year-to-date gain of 15% vs. 10% for Nasdaq (QQQ) , 8.2% for the S&P 500, just 3% for Dow Industrials and a meager 0.7% for the Russell 2000 (IWM) .

When I wrote "What Could Happen to Major Stock Indices When a Correction Comes" on Tuesday, I advised investors and traders to focus on my first "crunching the numbers" table in that post. It was a good idea.

This benchmark table shows that Transports were last to peak before the crash of 2008. With transports now at 8,496.93, keep in mind that the May 2008 high was just 5,537 -- with the March 2009 low at 2,134. (These are not misprints.)

In my opinion, Transports cannot sustain a 300% gain from the March 2009 low.

Read More: Why Prospect Capital's 12.6% Yield Is a Great Deal in a Stalling Rate Environment

Let's take a look at the weekly chart for Dow Transports.

Courtesy of MetaStock Xenith

The weekly chart for Dow Transports is positive, with the five-week modified moving average at 8,318 with rising 12x3x3 weekly slow stochastics. The 200-week simple moving average at 5,916 represents the long-term reversion to the mean. Transports are above semiannual and monthly pivots at 8,447 and 8,410, which is a sign that Transports are an inflating parabolic bubble.

Now let's look at the profiles for the five momentum transportation stocks that led Transports to new highs. Two "crunching the numbers" tables follow.

Con-Way  (CNW) ($52.76) is up 33% year to date and set a multiyear intraday high at $52.87 on Sept. 3. The weekly chart is positive but overbought, with its five-week modified moving average at $50.39. A semiannual value level is $46.47, with a monthly pivot at $50.67 and no risky levels. A trucking company with this pattern is clearly an inflating bubble.

Southwest Air   (LUV) ($32.58) is up 73% year to date, and set an all-time intraday high at $32.92 on Sept. 2. The weekly chart is positive but overbought, with its five-week MMA at $30.11. A quarterly value level is $25.64, with a monthly risky level at $33.88.

Ryder Systems  (R) ($92.88) is up 26% year to date, and set an all-time intraday high at $93.85 on Sept. 3. The weekly chart is positive, with its five-week MMA at $89.31. Semiannual value levels are $84.23 and $72.39, with monthly and quarterly risky levels at $93.29 and $97.16, respectively.

Read More: How the American Air Merger Helped Charlotte, Philly and Fort Wayne

United Continental  (UAL) ($49.03) is up 30% year to date, and set an all-time intraday high at $50.00 on Sept. 2. The weekly chart is positive, with its five-week MMA at $46.46. Quarterly and semiannual value levels are $45.64 and $42.75, respectively, with a monthly risky level at $53.29.

Union Pacific  (UNP) ($106.60) is up 27% year to date, and set an all-time intraday high at $107.38 on Sept. 3. The weekly chart is positive, with its five-week MMA at $102.88. Quarterly and semiannual value levels are $102.34 and $93.61, respectively, with a semiannual pivot at $106.04 and monthly risky level at $110.85.

Up next: charts on when to buy and sell these stocks.

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