Transport stocks are on fire this week, and may be set for more gains

Transport stocks are on pace for their best week in more than a year, and some market watchers expect more gains.

Despite a dip Friday, the Dow Jones transportation average was up nearly 6 percent for the week and was on track for its best week since November 2016. The gains were led by Avis, Southwest and CSX.

The transports will see further upside, said Michael Bapis, partner and managing director of The Bapis Group at HighTower Advisors, particularly if the Trump administration's proposals for infrastructure improvements take shape.

"How ironic is it, in this technology-dominated world, that we're speaking about the oldest index, which was founded in 1884, and it's still relevant to us?" Bapis asked during an appearance Thursday on CNBC's "Trading Nation."

"There's a lot of positive momentum behind it, and we think it was a little bit of a laggard. It all finally came together this week," Bapis said.

The transports look attractive on a technical basis, said Rich Ross, head of technical analysis at Evercore ISI.

Specifically, he said the recent action in the group appeared to mirror the pattern immediately following the 2016 election.

"In a bull market, what do we do? We buy strength. And there's no stronger corner over the past week than the transports," Ross said Thursday on "Trading Nation."

"What we love here is the symmetry with last November, into December, this resurgence of the 'Trump trades.' You saw the transports shot out of a cannon coming out of the election, and kept going. And that's what we see now with this talk about tax reform," Ross said.

On a longer-term weekly chart of the transports, the story looks even more supportive, he said, pointing to a multiyear base of support.

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