NEW YORK (TheStreet) -- Old Dominion Freight (ODFL) - Get Report and United Parcel Service (UPS) - Get Report set new highs or their own pushing the Dow transportation average to an all-time high at 7245.43 in intra-day trading on Monday. Five of the eight truckers, rails and freight companies we've been tracking led strength in transports.
The daily chart for the Dow transportation average shows a negative divergence in momentum with a 12x3x3 daily slow stochastic reading at 77.35, moving below the overbought reading of 80.00. The transportation average is above its 21-day, 50-day and 200-day simple moving averages at 7067, 6811 and 6391.
A daily close below the 21-day shifts the daily chart to negative. I consider the new all-time high at 7245.43 as a test of my quarterly risky level at 7205, a level at which investors in the transportation sector should book profits. Note that Tuesday's low at 7096.95 was below my weekly and semiannual pivots at 7126 and 7104. My monthly value level is 6927.
Courtesy of MetaStock Xenith
In my last post covering these stocks,
, I provided my buy-and-trade profiles even though six of the eight stocks had sell ratings according to www.ValuEngine.com. Since then only one stock is lower by 6%, while three had double-digit gains between 11.9% and 17.9%.
Today's table shows that seven of eight transportation stocks that I track have sell ratings and one has a hold rating. All remain overvalued with six overvalued by 20.8% to 37.6%. All eight have had positive returns over the last 12 months by 21.9% to 54.0%. All are projected to be lower 12 months from now by 5.2% to 9.4%. One is below its 200-day SMA with seven above, which reflects the risk of a reversion to the mean.
Reading the Table
Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.
A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.
Last 12-Month Return (%):
Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.
Forecast 1-Year Return:
Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.
Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.
A level between a value level and risky level that should be a magnet during the time frame noted.
Price at which to enter a GTC limit order to sell on strength.
($40.42 vs. $42.99 on Oct. 7) reported quarterly results on Oct. 30 with an EPS miss of 4 cents earning 58 cents a share. Con-Way set a multi-year high at $46.52 on Aug. 2 and was up against that level again on Oct. 22 pre-earnings. The stock has been below its 50-day SMA at $43.00 since that earnings miss. The 200-day SMA is $39.22 with a semiannual pivot at $41.77 and monthly risky level at $43.63.
($26.90 vs. $25.36 on Oct. 7) reported quarterly on Oct. 15 with an EPS beat of 4 cents earning 46 cents a share. The stock slipped on some post-earnings profit-taking and after a dip to $25.28 on Oct. 17 moved back above its 50-day SMA on Oct. 21 and traded to a new multi-year high at $27.48 on Nov. 18. The stock is just below my quarterly pivot at $26.93 where buy-and-trade investors could have booked profits. My weekly value level is $26.12 with the quarterly pivot at $26.93 and semiannual risky level at $28.95.
($134.00 vs. $113.69 on Oct. 7) led the transportation average delivering its record high at $139.94 on Nov. 15. My semiannual value level is $123.36 with a weekly risky level at $138.15 which failed to hold as this week began.
JB Hunt Transport
($72.68 vs. $72.16 on Oct. 7) reported results Oct. 14 with an EPS miss of 3 cents earning 75 cents a share. The market ignored the miss and on Nov. 4 set a new multi-year high at $78.65. With my monthly risky level at $77.31 this month a buy-and-trade investor could have had a GTC limit order to sell strength to $77.31 and the execution would have been at the $78.65 opening price. The stock ended Nov. 19 just below its 200-day SMA at $72.86 with a semiannual value level at $72.05 with a weekly pivot at $73.07.
($86.30 vs. $76.82 on Oct. 7) reported results Oct. 23 with an EPS beat of 14 cents earning $1.53 a share. The stock gapped higher and set a new multi-year high at $88.99 on Oct. 29. My annual value level is $82.73 with a weekly risky level at $88.62, which suggests that another new high is unlikely at least for this week.
Old Dominion Freight
($49.19 vs. $46.78 on Oct. 7) reported results Oct. 24 with a beat of a penny earning 70 cents a share. The stock dipped that day on profit taking but closed above its 50-day SMA. The stock traded to a new multi-year high at $50.14 on Nov. 18, the same day that Dow transports set its all-time high. My semiannual value level is $40.38 with a monthly pivot at $50.30 and quarterly risky level at $52.66.
($158.10 vs. $152.73 on Oct. 7) reported results Oct. 17 with a beat of a penny earning $2.48 a share. The stock traded as low as $149.23 on Oct. 30 testing its 200-day SMA. The upside from there was to $159.91 on Nov. 18 helping the transportation chug to its all-time high. My weekly value level is $151.36 lines up with the 200-day SMA at $151.38 with my semiannual risky level at $167.94.
United Parcel Service
($100.72 vs. $90.03 on Oct. 7) reported results Oct. 25 and matched estimates earning $1.16 a share. The stock traded as low as $88.45 on Oct. 9 holding its 50-day SMA. The strong rebound that followed reached a new multi-year high at $101.74 on Nov. 18 as the transportation average delivered its all-time high. My monthly value level is $96.09 with a quarterly risky level at $99.76.
At the time of publication the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Richard Suttmeier is the chief market strategist at AlphaPlus Analytics in addition to ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.
Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.
Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.
Click here for details on Suttmeier's "Buy and Trade" investment strategy.
Richard Suttmeier can be reached at RSuttmeier@Gmail.com