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Oil is sending this sector into record high territory

A case of chicken or the egg is playing out in the market.

The unrelenting plunge in oil is propelling shares of airlines and truckers, and that has in turn pushed the transportation index to new highs. Dow theorists will tell you that the performance of the transports often indicates the market's next move, as they are economically sensitive stocks.

With the index at a record, though, some investors are asking a simple question: Is rally in the transports simply all about oil, or are they signaling a stronger economy ahead? And as it turns out, the Dow Jones Industrial Average is near its all-time highs.

(Watch: Crude collapse: Planes, trains & autos)

Gina Sanchez, founder of Chantico Global, believes it's simply a matter of oil prices. "If you are invested in this industry, then you really need to be following what's happening with oil," said Sanchez, who also linked the decline in oil to a "weak" economy.

"It's not really enough to propel transport stocks where they are," Sanchez added.

No matter what are the causes of the transports' climb, the technicals are bullish, according to Steven Pytlar, chief equity strategist at Prime Executions.

"The transportation chart has been one of the strongest charts for the last couple of years," he said. "That strength has continued into 2014."

(Watch: Record airline fees: Estimated $49.9 billion)

Pytlar sees the Dow Jones Transportation Average as having stayed in a well-defined upward-sloping trend channel since the beginning of last year. That channel was briefly violated last month when the index broke below its support. The index subsequently bounced back.

"That indicated very strong buyer demand," Pytlar said. "It indicates that people are upgrading their outlook for the transportation sector – potentially on lower gasoline prices. We see it headed back toward the upper bound of that trend channel that it has been in for the last two years."

According to Pytlar's chart, that upper bound is close to the 9,000 level, less than 200 points away from Tuesday's close.

"It probably continues to run until we hit that upper bound," he added.

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