The Dow Jones Transportation Average (TRAN) 2,742 +0.46% have edged above their rounding lower 50-day moving average today and this could get the attention of broader market bears. With MACD recently turning above its signal, bulls may start pecking away at the sector on a more aggressive basis here, using horizontal support at 2,600 and the rounding flat 200-day MA as support.
Dow Transportation Average Chart - Daily Interval
By session's end, bull would like to see the TRAN close above its 50-day. In recent weeks, we've seen some intra day violations of the 50-day MA, but the bulls have been unable to muster a close above this key moving average.
Market theory has some believing that the Transports (TRAN) are often times one of the first groups to lead higher under a recovering economic scenario.
As we look through the various sectors and market averages, the Dow Transports (TRAN) are one of the few sectors currently trading ABOVE their 200-day MA and 50-day MA's. This hints that the MARKET may be warming back up to the group on both a longer- term (200-day) and intermediate term (50-day) basis.
It's been my thinking that if the MARKET were to start getting bullish this economically sensitive group, then bullishness may build in other sectors.
Dow Transport Components - Sorted by % Gain/Loss today
One stock that I've mentioned recently as bullish is shares of FedEx Corp (NYSE:FDX) $55.98 -1.13. The chart of FedEx (FDX) shows a reverse head and shoulders pattern with the neckline at $56 and bulls can target the $61 level, which would be near the stock recent 52-week high. A stop on the underlying stock could be placed just under the starting to round high 50-day MA of $53.70 and correlate its action against the above chart for the Dow Transports.