The Plight of the Transports

One of the more noteworthy market trends over the past couple of months has been the relative underperformance of the Dow Jones Transportation Index.  After a devastating few days that saw both FedEx (FDX) and Norfolk Southern (NSC) collapse on negative guidance, the Transports fell nearly 6% this week.  At the same time, the Dow Jones Industrial Average (DJIA) only fell a few points.  Below is a chart comparing the performance of the Transports and the Dow over the last six months.  The huge divergence between the two over the last couple of weeks stands out.

Over the last six months, the Dow (DJIA) is up 3.47%, while the Transports are down 7.90%.  While wide, the 6-month spread in performance between the two is not out of the ordinary, as shown in the chart below.  At the same time, peaks and troughs in the performance spread have not really been bullish or bearish for the future direction of the overall market either.  While the spread could widen more, it's likely that we'll see a reversal in the relative underperformance of the Transports in the near future, but that doesn't mean the Dow is doomed. 

Looking for new stock ideas?  Each week we publish "the Bespoke 50," a list of our favorite growth stocks in the Russell 3,000.  To make the list of 50, a stock must have strong earnings growth prospects along with an attractive price chart based on Bespoke's proprietary fundamental and technical analysis.

The "Bespoke 50" is released on a weekly basis, and in it you'll find the 50 stocks that made the cut, price charts for each of them, and an Excel file that you can download as well.

If you're interested in finding the 50 growth stocks that Bespoke finds most attractive, become a Bespoke Premium member today.  Please click here to subscribe.