With earnings on tap this week and next, the transportation group will likely cover more miles than usual. To one technician, the only direction for the group is up.
The 200-day moving average, which acts as a proxy for trend, is heading north, says Wald who rates the industry as a buy. That longer-term moving average currently sits at $181 a share, a level the ETF has not closed below since November.
"Within this uptrend, we are seeing some signs of stabilization at an important support level. That support level is about $181," said Wald. "We came down and tested it in early February, tested it again more recently, so we are seeing some signs of base building at that important level."
Gains over the past week have also improved the technical outlook for transports stocks, he said. The IYT has risen by more than 1 percent three times in the past five sessions.
"It is reversing the ETF's downtrend year to date. I think it would be the final confirmation you're looking for a rally through $196 resistance," said Wald.
The IYT currently trades nearly 3 percent from its $196 level of resistance. The ETF has not closed above that level since early February.
Stacey Gilbert of Susquehanna sees the bullish case for transports stocks from a fundamentals perspective.
"Investor concerns about first-quarter profits being weaker because of harsh winter weather and inconsistencies with railroads were really short-sighted," Gilbert, head of derivatives strategy, said on "Trading Nation." "For truck-levered companies, this is the best fundamentals backdrop that they've seen in a decade."
In the trucking subsector, Gilbert and Susquehanna senior equity research analyst Bascome Majors see potential for J.B. Hunt and Hub Group. They forecast at least 20 percent to 22 percent upside from current levels, one of the more bullish calls on the Street for both names.
As for railroad companies, Gilbert has her eye on Norfolk Southern.
"This is really our contrarian call," she said. "Bascome's price target is about 22 percent above current levels and from a valuation perspective this is certainly cheap relative to peers."
On its options, Gilbert added, "This is the name where we've seen an increase in options order flow where investors seem to be positioning bullishly in ticker NSC."
Transports stocks have underperformed the broader markets this year. The IYT has fallen 0.4 percent compared with the S&P 500's slight gain. The Dow transports index is flat for the year.
Disclosure: Susquehanna Financial Group owns 1 percent or more of Norfolk Southern.