Transports, on a tear, could be flashing the all-clear sign for stocks

Transport stocks surged Friday, tracking for their longest weekly winning streak of the year.

Transports' bullish behavior is bullish for the market, said Chris Verrone, head of technical analysis at Strategas Research Partners.

"In what has been an otherwise challenging market, the transports are still leaders here," Verrone said Thursday on CNBC's "Trading Nation."

He cited the group's ability to hold its 200-day moving average this year even when the broader market has faltered. Indeed, the Dow transport index hasn't breached its 200-day moving average to the downside since August.

Transport stocks are traditionally seen as an indicator of broader economic health, given transportation companies' wide usage across industries.

"Truckers strong, rails strong; I think that speaks to a pretty healthy backdrop here," Verrone said, adding that he specifically likes J.B. Hunt and Union Pacific, which have rallied a respective 12.5 percent and 10 percent in 2018.

Other market watchers are more cautious on the transports given international trade tensions coming to a boil, and the potential impact on U.S. companies particularly exposed to trade with countries in the crosshairs of tariff talk.

"If you look at what has driven the rally for the last 12 months, it has been a strong global trade story. That would naturally benefit trucks, rails and airlines," Gina Sanchez, CEO of Chantico Global, said on "Trading Nation."

"We've seen an uptick in terms of global trade volumes; it has been going up for the last 12 months, but that's starting to wane. The concern we have is really around this aggravated talk regarding tariffs and a continued potential trade war," Sanchez said.

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.

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 CNBC and 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

Read more

Connect