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Cautionary Indicator: US Transports Show Negative Divergence To S&P 500

Published 08/30/2012, 01:35 AM
Updated 07/09/2023, 06:31 AM
US500
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UNP
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NSC
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DJUSAF
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DJUSRR
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DJUSTK
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Rail, trucking and package delivery are among key indicators of business activity in the United States. The recent relative performance of transportation stocks and the S&P 500 suggests that stocks overall might be somewhat ahead of themselves, or perhaps set up for a correction.

  • SPX = S&P 500 (proxies: SPY, IVV and VOO)
  • TRAN = DJ Transports (proxies: IYT and XTN [XTN is equal weighted])
  • DJUSRR = DJ Railroads (members CSX [CSX], Norfolk Southern [NSC], Union Pacific [UNP])
  • DJUDTK = DJ Trucking (member J.B. Hunt [JBHT])
  • DJUSAF = DJ Delivery services (members, Fedex [FDX] and UPS [UPS])
RELATIVE PERFORMANCE and ABSOLUTE PERFORMANCE of the S&P 500 AND TRANSPORTATION INDEXES

These three charts plot the ratio of the price level of each of several transportation indexes versus the S&P 500.
Trans Relative 1
5-Year Monthly Absolute
Trans Perf 1
The 5-year chart generally is outperforming the S&P 500 since the market bottom in 2009 until mid-2011, when it was basically flat with the broad index, and then under-performing in 2012.

1 Year Weekly Relative
Trans Relative 2
1-Year Weekly Absolute
Trans Perf 2
The 1-year chart more clearly shows the turn to negative relative performance in 2012 for all but railroads — and they too have turn down on a relative basis recently.

3 Months Daily Relative
Trans Relative 3
3-Months Daily Absolute
Trans Perf 3

The 3 month chart clearly shows that over the past month, the overall transports and its railroad, trucking and delivery services components are in a down movement. That probably as a lot to do with the flattening of the S&P 500 in the same period.

Disclaimer and Disclosure: This and every post of ours is subject to our general disclaimer. As of the date of this post, we have positions in SPY and NSC.

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