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Transports Likely to Close at Historic Highs

KLM Airlines
KLM Airlines

Dow Transports poised to close at an historic high. This is, at first glance, a play on airlines.

Why the airlines? Because they have turned their businesses around: 1) they have paid down debt, 2) mergers have increased, with more to come, 3) they have limited capacity, and 4) raised prices.

But the group to keep an eye on is railroads. They have a bigger market capitalization than airlines and, most notably, underperformed the S&P 500 last year.

Railroads have now become relative value plays.

In addition, railroads are plays on the U.S. economy in 2013...on cars, agriculture, and coal, so any downturn in outlook will affect their recent rally.

Air freight: improving Asian freight data will help companies like Federal Express (FDX) and Expeditors International (EXPD).

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

Wall Street

  • Federal Reserve Bank Board Chair Janet Yellen.

    Market conditions and stabilizing economic data could lead the Federal Reserve to raise interest rates in October, David Lebovitz said.

  • Job seekers attend a Job Fair Giant career fair in Sterling Heights, Michigan, Sept. 30, 2015

    Stocks sank and investors ran to Treasurys after a disappointing jobs report pushed off expectations for a Fed rate hike into 2016.

  • Job seekers wait in line to enter the Choice Career Fair in San Antonio, Texas.

    The economy created 142,000 jobs in September, a number that whiffed on expectations and could cool expectations that the Fed will start raising rates.