Dow Transports Sets All-Time High in Opportunity to Book Profits on Truckers - TheStreet

NEW YORK (TheStreet) - Investors should book profits on strength for the three trucking companies that are components of the Dow Transportation Average. JB Hunt (JBHT) - Get Report and Landstar (LSTR) - Get Report have already reported third-quarter earnings and beat analysts estimates. Con-Way (CNW) reports after the closing bell on Wednesday and analysts expect the trucker to report earnings of 75 cents a share.

Since the stock market may be significantly higher or lower following the Fedstatement that will follow the FOMC meeting on Wednesday, let's assess the "must see" weekly chart for the Dow Transportation Average.

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Courtesy of MetaStock Xenith

The weekly chart for Dow Transports (8,759) shifts to positive from neutral, given a weekly close on Friday above its key weekly moving average at 8,358 with rising momentum. The red line along the bottom of the graph is momentum, which is now rising at 61.71 up from 54.43. The green line is the 200-week simple moving average at 6,054, which was last tested at 4,324 in Oct. 2011.

Note that the Transportation Average set an all-time intraday high at 8,768.83 on Oct. 28 in anticipation of a dovish Federal Reserve.

The correlation to the dynamics before the "Crash of 2008" remains the same, as Dow Transports were the last to peak -- doing so in May 2008. So far in 2014, the Russell 2000I:RUT peaked first on July 1 -- similar to what it did in July 2007. Dow Industrials (DIA) - Get Report and S&P 500 (SPY) - Get Report peaked in October 2007; the Nasdaq (QQQ) - Get Report peaked in November 2007.

Up next: technicals on Con-Way, JB Hunt and Landstar.

Con-Way ($45.40) is up 14% year to date, lagging the Transportation Average, which has a gain of 18%.

On April 30, the company beat first-quarter estimates and the stock gapped higher, staying above its 200-day simple moving average, then at $41.28. On July 30, the trucker beat second-quarter earnings and gapped higher, once again trading to its multiyear intraday high at $53.54 on Sept. 12.

It's been a rocky road since then, as shares crashed 25% to a low of $40.29 into Oct. 13, well below its 200-day SMA at $45.02, which was recaptured on strength into Oct. 28.

Given this volatility, investors should sell strength to the stock's 50-day simple moving average at $48.18, as the stock should remain well shy of its high at $53.54. Failure to hold its 200-day SMA at $45.02 indicates risk back to the low at $40.29.

JB Hunt ($78.86) is up just 2% year to date and has been trading back and forth around its 200-day SMA at $54.04 all year, with an all-time intraday high at $79.89 on Jan. 22 and 2014 low at $69.33, set on March 25. Investors should sell strength to the high at $79.89.

Landstar ($74.50) is the trucking leader, up 30% year to date, and set an all-time high at $75.63 on Oct. 22. The stock is above its 50-day and 200-day SMAs at $70.77 and $64.06, respectively, and investors should sell strength to the high at $75.63.

At the time of publication the author held no positions in any of the stocks mentioned.

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

TheStreet Ratings team rates CON-WAY INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CON-WAY INC (CNW) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

You can view the full analysis from the report here: CNW Ratings Report