This year, getting there beats being there

After a gut-wrenching drop and impressive rise, the major indexes are about flat on the year — the Dow Jones industrial average is up about 3 percent, the S&P 500 is up 2 percent and the Russell 2000 is down 1 percent.

One set of stocks that is turning out impressive outperformance? The users of trains and boats and planes and trucks, as tracked together by the Dow Jones transportation average. That index is up 6 percent in 2016.

The group appears to be the beneficiary of a rare gift in financial markets: low expectations, due to struggles in the energy patch and the industrial economy more generally.

For instance, when CSX reported earnings on Tuesday, the railroad company announced that its profits had fallen 20 percent versus the year prior, and revenue was down 14 percent — matching and missing analysts' expectations, respectively. The fall corresponds to the troubles in America's coal business.

Yet the stock still managed to rise powerfully on Wednesday, likely because the company was able to show cost savings.

"We know 2016 will be a challenging year," but "we will leverage technology to further improve safety, service and efficiency, as we continue to evolve our business for the realities of tomorrow's economy," CEO Michael Ward said on the company's earnings call, in what must count for bullishness in the current environment.

Despite their recent turnabout, CSX shares are still down 22 percent in the past year.

Analyzing the transports as a whole, Boris Schlossberg of BK Asset Management observed that "you look at technicals and it looks great, but you look at fundamentals and it's a completely different story."

"I wonder if this whole rally could be a catch-up rally," predicated on the turnabout in oil prices, Schlossberg said Wednesday on CNBC's "Power Lunch." "It could be a false flag."


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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