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Transports "bright spot" as truckers see gains

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It's been quite a while since traders or investors have seen the Dow Transportation Index (TRAN) 2,185 +1.35% among the leading sector gainers, especially when the major market indexes have shown mixed to lower trading as witnessed today.

The Dow Industrials (INDU) 7,932 -0.66% continues to hover right near its weekly S1 level of support, but starting to give up that level as I write, and may be signaling further downside to our WEEKLY S2 level of support. Still, the Dow, SPX and OEX are seemingly being buoyed above this morning's lows by a NASDAQ-100 Index (NDX.X) 971.36 +0.24% that refuses to give up its WEEKLY S1 level of support at 960. Not that I'm "cheering" for a NASDAQ- 100 breakdown, but a key technical level that major index bears would want to see broken if downside action is to be seen.

The strength in the Dow Transports (TRAN) is coming from trucking stocks like Roadway Corp. (NASDAQ:ROAD) $36.22 +5.72% and Yellow Corp. (NASDAQ:YELL) $24.80 along with other truckers after a tentative deal covering 65,000 Teamster Union members was reached.

The agreement, which covers wages, pensions, work rules and health care, will cost employers $1.7 billion over five years, according to a Teamster Union spokesperson.

Executives at unionized LTL, or less-than-truckload, groups specializing in cargoes under 10,000 pounds, the Teamsters and Wall Street had worried that extended bargaining would spur shippers to move cargoes to nonunion rivals even as LTL carriers enjoy booming profitability.

The deal comes some seven weeks ahead of the March 31 expiration of a current five-year pact. It will add $2.25 over the next five years to the $19.90 average hourly wage paid to drivers and cargo handlers, according to Teamsters spokesman Bret Caldwell.

He said the deal also keeps healthcare benefits at current levels, including no worker premiums and no co-payments by union members for medical services.

A quick check of market volume shows a relatively light volume session with NYSE volume rather "normal" at 1.2 billion shares, while NASDAQ volume is "light" at just over 1.0 billion shares traded.

Internals have decliners outnumbering advancers by a 2 to 1 margin at the big board, while NASDAQ breadth has decliners outnumbering advancers by a 3 to 2 margin.

New highs versus new lows categories show little sign of any leadership with just 38 stock trading a new 52-week high on the NYSE compared to 88 stocks hitting new lows. NASDAQ is equally weak in this category of breadth with just 39 stocks having traded a new 52-week high compared to 80 stocks trading new lows.

Jeff Bailey

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