The transportation ETF XTN had a bearish AROON spike up today on the chart. Rising oil prices are likely to blame.
Oil closed above $70 a barrel today even though Saudi Arabia and Russia said they were increasing production.
The S&P 500 Industrials sector is projected to generate 20% EPS growth, yet the sector trades a slightly below-average P/E multiple of 17. This discrepancy could be setting up an excellent swing long opportunity in transportation stocks.
The other catalyst for transportation stocks could be efforts by the Trump Administration to raise the rates that the US Postal Service charges Amazon. Private sector transportation companies like UPS and FedEx would see an increase in market share growth if the US Postal Service rates go up.
With oil rising, and with the red AROON line spiking up, it’s too early to go long transportation stocks right now IMO. Don’t try and catch a falling knife. Let XTN turn first or if you’re really conservative, wait for a green AROON line spike up before going long transportation stocks.