I have been questioning the transports' ability to confirm the rally of late because so many are tied to coal, which is in secular decline because of the secular rise of natural gas (not the price, but the use), coupled with an EPA that has apparently decided to get rid of coal as a fuel.
But I haven't stopped thinking about the need to get either UPS or FedEx moving because there is nothing more important to the index than these two companies.
Sure, I think Union Pacific, the best-acting rail, is a terrific barometer because it has less coal and more China traffic. That said, it does have a lot of re-pricing that has given it better margins.
The airlines? They have so many intrinsic issues of execution and demand and fuel that they have become an awful tell.
Trucking? I think UPS and FDX are THE truckers that have the ability to ship worldwide. But they have been stalled, big time. They had been confirming the pathetic Baltic Freight numbers and the hideous Suezmax oil tank day rates. Until yesterday. On the strength of a slim research call that FDX will benefit from a fleet changeover, the stock jumped. It's igniting a long-needed rally.
I think that we get a couple of up days for the transports, and we are going to be talking about a phony rally that might not be as phony as the graybeards--all of whom swear by the transports--swear it is.
Watch FDX. Watch UPS. They could be the key to the next leg of the transport rally, which in turncould be the backbone of the next leg up for the entire market.
Disclosures: Cramer's charitable trust has no positions in the stocks mentioned.
