Talking Numbers

The oil spike is about to ruin the hottest trade of the year

This record-breaking sector could be in a lot of trouble

It's been a record month for transportation stocks. But, will the spike in oil put an end to that?

The Dow Jones Transportation Average reached all-time highs just one week ago. Since then, it has fallen 2 percent. According to Richard Ross, global technical strategist at Auerbach Grayson, more down days are on the way.

"I'm quite bearish," said Ross, a "Talking Numbers" contributor. "This is one of my higher conviction calls on the short side, in a world where the short side is not really working particularly well. But, I think we have a very nice bear candidate here with those transports."

(Read: )

Ross notes the iShares Transportation Average ETF (IYT), which tracks the Dow Transports, has stayed above its 100-day moving average for much of the past 12 months. He sees the recent peak as a "blow off top" and considers it "the exhaustive stage of this fantastic move."

But, it's the long-term chart that has Ross concerned. "Yes, it has been a fantastic performer, but that's the history," Ross said. "Going forward, I think we could see a sharp pullback."

Key to Ross' long-term charts is the 150-week moving average. In 2011, the IYT dropped 32 percent down to its 150-week moving average. Ross calculates that at its recent peak, the ITY reached about 40 percent above the 150-day, which is currently at 150.54.

"That is simply not sustainable," Ross said. "This is not a compelling entry point on the long side. You have to be a seller if you do have gains and look to be a short seller if you are an aggressive trader."

(Read: )

For David Seaburg, head of equity sales trading at Cowen and Company, there will be one likely culprit in bringing down transportation stocks – higher expenses.

"It's cost structure here – costs are going up," said Seaburg. Those higher costs include drivers demanding more money and higher oil prices. The price of WTI crude oil contracts were at $106.79 per barrel on Monday – 2 percent higher than the previous week – on concerns over production in Iraq.

But, Seaburg sees another cost that could also come with a rebound in the economy – competition with other industries for drivers. "As the economy improves," he said, "you're going to find that a lot of the truckers are going to leave."

"Long term, I think it could be a different set up," added Seaburg. "But, near term, I would be a seller here."

To see the full discussion on transportation stocks and the IYT, with Ross on the technicals and Seaburg on the fundamentals, watch the above video.

Follow us on Twitter: @CNBCNumbers
Like us on Facebook: