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Dow Transports ‘Overbought’: Grasso

Tuesday, 22 Jan 2013 | 1:19 PM ET
Dow Transports 'Overbought': Grasso
It's time to pull back on specific stocks in the Dow Transports, Stuart Frankel's Steve Grasso says.

As the Dow Transportation index hits an all-time high, it's time to pull back on specific stocks, Stuart Frankel's Steve Grasso said Tuesday.

"If you look at the top four holdings in the transports, they count for basically 40 percent of the whole index," he said. "And all of them, whether it's UNP, FedEx, KSU or UPS, they're all registering 'overbought' right now."

On "Fast Money," Terranova also noted that the Dow transports have been up about 17 percent since mid-November.

"I think you need to pull back specific stocks, obviously," he added.

(Read More: Forget Dow Theory: Small Caps May Be a Better Market Indicator)

When talking about transports, Grasso said it was important to keep an eye on coal.

"If you look at any of these rails, they'll all tell you that their biggest margins are on transporting coal," he said. "So whenever you see that coal demand slide, you know that the rails are going to get hit. So we've seen coal bottom as far as prices, so maybe to your point, you do get a little bit of wind at your back, so to speak."

Trader disclosure: On Jan. 22, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Joe Terranova is long VRTS; Joe Terranova is long AAPL; Joe Terranova is long GS; Joe Terranova is long AXP; Joe Terranova is long MS; Joe Terranova is long GLW; Joe Terranova is long DELL; Joe Terranova is long SWN; Joe Terranova is long XOM; Joe Terranova is long RIMM 18 PUTS; Mike Murphy is long GS; Mike Murphy is long TGT; Mike Murphy is long FB; Mike Murphy is long EBAY; Mike Murphy is long USG; Josh Brown is long AAPL; Josh Brown is long C; Josh Brown is long JPM; Josh Brown is long WFC; Josh Brown is long GDX; Josh Brown is long GLD; Josh Brown is long XLU; Josh Brown is long TLT; Josh Brown is long XLF; Josh Brown is long WMT; Josh Brown is long TGT; Josh Brown is long CVX; Josh Brown is long JNJ;

For Colin Gillis
BGC Financial or affiliate beneficially owns or controls 1% or greater of shares of the subject company: GOOG; Subject company is an investment banking client: GOOG; BGC Financial or affiliate beneficially owns or controls 1% or greater of shares of the subject company: AAPL; Subject company is an investment banking client: AAPL; Subject company is an investment banking client: EBAY; BGC Financial or affiliate beneficially owns or controls 1% or greater of shares of the subject company: EBAY.

  Price   Change %Change
UNP
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FDX
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KSU
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UPS
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COAL
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S&P 500
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DJIA
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