Stocks Are In An Uptrend

JC Parets
August 8, 2020

I don't know if I've made myself clear enough. It's getting pretty obnoxious at this point isn't it?

We talk about this internally sometimes (ahem strazza), that we sound like a broken record.

My response is that we should be aware of our own behavior. The simple fact that we are recognizing, that yes, we are indeed being super annoying and just saying the same things over and over again, is information. It's really important to identify that.

Why? What does this mean? To me, it means that what's been working keeps working. And what needed to start working for those things to continue are working now too.

Exhibit A has to be the Dow Jones Transportation Average breaking out to new highs BEFORE the Dow Jones Industrial Average. Wait, What???? New phone who dis? 

Click on Charts to Zoom in

What world are we living in where Transportation Stocks are on an absolute tear on both an absolute and relative basis. Transportation stocks are the global leadership group???

Well, that is what I'm saying. In July, they were the world's best performer. We discussed this here.

Now look at Transports relative to the S&P500. We're going on 3 months since Transports bottomed on a relative basis. Notice how the outperformance started at exactly the 61.8% retracement of the entire 2000-2014 uptrend. Some might tell you that's just a coincidence. I won't. 

I dropped in what Momentum looks like on a daily timeframe. We have bullish momentum divergences on both Weekly & Daily timeframes (14-period RSI).

I'm a weight-of-the-evidence guy. You know that. And for me, I just can't get in front of this runaway train.

(See what I did there? Train. Transports! I'm a new dad now so I'm working on my dad jokes)

The bottom line is this. Tranports are already making new highs for this cycle. I think it's inevitable that the Dow Industrials follow along. I find it particularly interesting how Transports are the new leadership group. It reminds me of early 2016 when Transports then led the way for the whole year.

Two things. 1) go through all the Dow Jones Transportation stocks. There are only 20 of them. and 2) think about what the broader market implications are, especially the first chart, of Tranports breaking out and Industrials looking like they're right behind them.

Oh and one more thing for those telling me that I'm conveniently forgetting to point out that Transports still haven't made new all-time highs and are well below their 2018 highs. My answer is that, yes I know, I get the data too. I, once again, encourage you to go through all 20 Dow Jones Transportation stocks and tell me if more of them are breaking out multi-year bases to new all-time highs, or if more of them are completing massive tops and breaking to new lows? There you'll find your answer. Hint: See $EXPD $UNP $UPS $LSTR $KSU $JBHT $CHRW

That's all I have for today!

If you still haven't watched this week's conference call, I don't know what you're thinking.

JC

 

 

 

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