This ETF Will Give You the Best of the Transport Stocks

The Dow Jones Transportation Average is up a solid 15.9% since bottoming at 6,403.31 on Jan. 20. This looks good but it hasn't had much of an effect on the other stock averages.

Investors who want to buy some exposure to transports can do so using the iShares Transportation Average (IYT) , the exchange-traded fund that most closely matches the performance of the average. The ETF has a solid gain of 16.1% since trading as low as $114.91 on Jan. 20.

The most heavily weighted components of this ETF are global shipping giants FedEx  (FDX) and United Parcel Service (UPS)  as well as railroad stocks Union Pacific (UNP) , Kansas City Southern (KSU) and Norfolk Southern (NSC) . As you might expect, the performance of the individual stocks is mixed.

Should you buy them all in one tidy ETF package or buy one or more of the individual stocks? Let's check the scorecard for the transportation ETF and its five largest components.

Here's the weekly chart for the transportation ETF.


Courtesy of MetaStock Xenith

The transportation ETF closed Monday at $133.39, down 1% year to date and still in bear market territory 20.5% below its all-time high of $167.80 set on Nov. 28, 2014. The ETF is 16.1% above its 2016 low of $114.91 set on Jan. 20. The ETF is above its 50-day simple moving average of $128.30 but below its 200-day simple moving average of $142.43.

The weekly chart is positive with the ETF above its key weekly moving average of $129.56 and above its 200-week simple moving average of $128.38. The weekly momentum reading is projected to rise to 33.30 this week up from 26.07 on Feb. 19.

Investors looking to buy IYT should place a good till canceled limit order to buy the ETF if it drops to $128.81, which is a key level on technical charts until the end of February. Investors looking to reduce holdings should place a good until canceled limit order to sell the ETF if it rises to $136.24, which is a key level on technical charts until the end of 2016.

Here's the weekly chart for FedEx.


Courtesy of MetaStock Xenith

FedEx (11.88% weighting) closed Monday at $135.39, down 9.1% year to date and still in bear market territory 26.9% below its all-time high of $185.19 set on June 11, 2015. The stock is 13.1% above its 2016 low of $119.21 set on Jan. 20. Unlike the ETF, the stock is below its 50-day and 200-day simple moving averages of $136.55 and $156.41, respectively.

The weekly chart is positive with the stock above its key weekly moving average of $134.90 and above its 200-week simple moving average of $132.11. The weekly momentum reading is projected to rise to 24.65 this week up from 23.03 on Feb. 19.

Investors looking to buy FedEx should place a good till canceled limit order to buy the stock if it drops to $130.28, which is a key level on technical charts until the end of February. Investors looking to reduce holdings should place a good until canceled limit order to sell the stock if it rises to $140.00, which is a key level on technical charts until the end of 2016.

Here's the weekly chart for UPS.


Courtesy of MetaStock Xenith

United Parcel Services (8.40% weighting) closed Monday at $98.02, up 1.9% year to date and in correction territory 14.3% below its all-time high of $114.40 set on Jan. 22, 2015. The stock is 12.3% above its 2016 low of $87.30 set on Jan. 20. The stock is above its 50-day simple moving average of $95.18, but the stock failed at its 200-day simple moving average of $99.28 on Feb. 17.

The weekly chart is positive with the stock above its key weekly moving average of $96.18 and above its 200-week simple moving average of $92.76. The weekly momentum reading is projected to rise to 45.10 this week up from 37.10 on Feb. 19.

Investors looking to buy UPS should place a good till canceled limit order to buy the stock if it drops to $93.89, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should place a good until canceled limit order to sell the stock if it rises to $115.09, which is a key level on technical charts until the end of June.

Here's the weekly chart for Union Pacific.


Courtesy of MetaStock Xenith

Union Pacific (8.40% weighting) closed Monday at $81.61, up 4.4%year to date and in bear market territory 34.5% below its all-time high of $124.52 set on Feb. 13, 2015. The stock is 21.7% above its 2016 low of $67.06 set on Jan. 21. The stock is above its 50-day simple moving average of $75.67, but the stock well below its 200-day simple moving average of $88.70.

The weekly chart is positive with the stock above its key weekly moving average of $77.74 and below its 200-week simple moving average of $85.79. The weekly momentum reading is projected to rise to 46.08 this week up from 32.96 on Feb. 19.

Investors looking to buy Union Pacific should place a good till canceled limit order to buy the stock if it drops to $72.35, which is a key level on technical charts until the end of this week. Investors looking to reduce holdings should place a good until canceled limit order to sell the stock if it rises to $96.94, which is a key level on technical charts until the end of 2016.

Here's the weekly chart for Kansas City Southern.


Courtesy of MetaStock Xenith

Kansas City Southern (8.30% weighting) closed Monday at $83.01, up 11.2% year to date and in bear market territory 34.4% below its all-time high of $126.49 set on Nov. 11, 2014. The stock is 33.5% above its 2016 low of $62.20 set on Jan. 21. The stock is well above its 50-day simple moving average of $72.96, but well below its 200-day simple moving average of $87.85.

The weekly chart is positive with the stock above its key weekly moving average of $77.82 and below its 200-week simple moving average of $98.99. The weekly momentum reading is projected to rise to 47.15 this week up from 35.06 on Feb. 19.

Investors looking to buy Kansas City Southern should place a good till canceled limit order to buy the stock if it drops to $79.30, which is a key level on technical charts until the end of February. Investors looking to reduce holdings should place a good until canceled limit order to sell the stock if it rises to $109.42, which is a key level on technical charts until the end of 2016.

Here's the weekly chart for Norfolk Southern.


Courtesy of MetaStock Xenith

Norfolk Southern (6.30% weighting) closed Monday at $75.96, down 10.2% year to date and in bear market territory 35.4% below its all-time high of $117.64 set on Nov. 25, 2014. The stock is 17.7% above its 2016 low of $64.51 set on Feb. 3. The stock is below its 50-day and 200-day simple moving averages of $77.25 and $83.55, respectively.

The weekly chart shifts to positive at the end of this week if the stock closes above its key weekly moving average of $75.52, which would indicate potential strength to its 200-week simple moving average of $85.80. The weekly momentum reading is projected to rise to 23.75 this week up from 19.67 on Feb. 19, moving above the oversold threshold of 20.00.

Investors looking to buy Norfolk Southern should place a good till canceled limit order to buy the stock if it drops to $69.48, which is a key level on technical charts until the end of February. Investors looking to reduce holdings should place a good until canceled limit order to sell the stock if it rises to $97.87 and $98.14, which are key levels on technical charts until the end of June and the end of 2016, respectively.

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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