TRAN Dow Jones Transportation Index Daily Chart

The trannies (TRAN; DJT; Dow Jones Transportation Index; transports) are slapped -2.5% this week and not feeling any love.The novel coronavirus is causing traders and investors to hit the sell button in the travel, hotel and airline stocks. This is what happened during the SARS outbreak about 17 years ago. Commodities are also smacked silly due to the virus outbreak and waning global demand. With the airlines less busy (who wants to fly to a disease-infested destination?), the demand for jet fuel will drop off sharply. This sends oil prices lower since crude is the feedstock.

So transportation companies should be joyous with lower fuel prices, right? Nope. The drop in tourism and business travel is far more negative than the companies experiencing some minor fuel savings, hence, the trannies are dressed-down this week. The red channel lines show the sideways to sideways downward bias that price is experiencing for the last couple years.

The Dow Transports pop above the upper red trend line but now retreat back for a test. This area is also the 20-day MA support at 11010. Price is at 10999 losing the 11-handle. Very simply, if TRAN remains below the 11010 and trends lower, the stock market will become sick. Bulls need the trannies above 11010 as fast as possible to keep the stock market party alive.

Price came up attempting to make a run at the 11.6K+ record high but alas, the tranports may be rolling over again. The Dow Jones Industrials Index (INDU; DJI; DJIA; Dirty Thirty) are printing record highs like the other indexes. From a Dow Theory perspective, the trannies must come up to print a new record high to confirm the highs in the industrials to verify that the big bull market party is real. TRAN, however, is struggling now. A lot will depend on the coronavirus.

UPS and FDX are in the Transports and key bellwethers on the global economy. Shipping activity is a direct indication of the health, or sickness, of any economy. In recent years, the Amazonifification of the online shopping industry and now the shipping industry is in full swing. AMZN keeps expanding into the shipping of its own products which leaves United Parcel and FedEx out in the cold with their noses pressed against the glass window.

If all the upside joyous price targets of the Wall Street analysts are to be realized this year, the trannies must take out those September 2018 highs. Each day that TRAN does not regain the 2018 highs, is another day that the bull coffin is lowered one inch more into the grave. If TRAN moves above 11.6K, the trannies, and stock market will be resurrected and the celebration of more monetary glory will continue. The transports are Born to Be Wild but lately have blown a couple tires and are swerving all over the roadway. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.