×

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.

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

Videos

Trades to Watch

Trader Bios

About

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.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

Read more

Connect