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Transportation

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The markets continue to hover around the zero line, dipping in and out of positive territory. Semiconductors are the only sector up over 1 percent, and Biotechs, Internets, Brokers, and Gold are the only sectors down over one percent. Like most sectors, transports are stuck in the middle.

Dow Jones Transportation Index Daily Chart

The Transportation Index (TRAN) has had a bumpy ride this year. After selling off in the first quarter, the index climbed to 3,000 in May. Transports then fell off a cliff, falling to test support at 2,600. Keeping the roller coaster ride going, the index climbed back up to 3,000 in July. Getting seasick yet? The waters may be calming as two longer-term trend lines converge to try calm movement. The up trend has a three-month advantage over the downtrend, but the index hasn't respected either recently. Currently the index is trying to test the downtrend, and make one more run at 3,000. Support looks strong at 2,850, and has the benefit of both moving averages. If that level breaks, the wild ride between 2,600 and 3,000 could continue. RailAmerica Daily Chart

RailAmerica (NASD:RAIL), a Premier Investor long play, has had a slightly smoother ride, never giving up more than 38.2% of its 2001 gains. Recently the stock broke above resistance at $12.90, and is now trying to set a new 52-week high. Volume is picking up somewhat today, but not enough to push the stock above $13.77. If needed, the stock should find support at $12.90, or just below at the 50-day moving average.

Jeff Canavan
Assistant Analyst
www.PremierInvestor.com

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