Transportation stocks tend to be a leading economic indicator. The theory goes that before you can sell the goods you have to move the goods. Train, plane, and truck businesses are some of the first to see a pickup in demand or a drop in demand. When transportation stocks break down, it is an indication of potential trouble for the market and economy.
The Dow Transports have been in a relative downtrend versus the Dow Industrials for the last year and half, and Young Research’s Moving the Goods Index—a measure of the performance of non-airline transportation stocks has also been in a downtrend.
When the transports signal potential trouble ahead as they do today, it is no time to try to be a hero with your investment portfolio.
The following two tabs change content below.
Jeremy Jones, CFA
Jeremy Jones, CFA is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Jeremy is a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
- The Worst Chinese Economy in 30 Years - October 18, 2019
- Can Boris’ Brexit Deal Pass? - October 17, 2019
- Are Low Interest Rates Amplifying Market Shocks? - October 16, 2019