Rebounding transportation stocks would be music to Dow Theorists
As the bull market officially turns three years old, it might be time to put an asterisk next to it if you ask some of the old-timers that still use Dow Theory to confirm a bull’s strength. The venerable theory is simple – to confirm the bull market you need to see the Dow Jones Industrial Average and the Dow Jones Transportation Average both making new highs. When they trend in unison it’s a signal of broad market strength. Essentially, it’s a view on an economy based on the things that make (industrials) and the things that take (transports). Dow Theory was in full effect until this year. Both indexes peaked together in December 2024 and bottomed together in April 2025. Since then it’s been a different story. Industrials have done well post “Liberation Day”, but transports have badly lagged. The Dow Transports are down about 2.3% YTD and would be lower still if not for Avis Budget Group (CAR) , up 90%, and Uber Technologies, ahead 58%. Tariff uncertainty continues to wreak havoc on airlines, railroads and truckers. Overall, of the 20 stocks in the TRAN, only 9 are higher this year. The hardest hit members are the shippers — UPS , FDX , Kirby (KEX) and Matson (MATX) — followed by the truckers – Old Dominion Freight (ODFL) , down -22.8%, and the stock in focus here, J.B. Hunt Transport Services (JBHT) . Stock/Trade to Watch – J.B. Hunt (JBHT) The story – The Arkansas based trucking company reports Wednesday afternoon. It has traded lower after five of the last eight results. When it’s risen, the gains have been minimal, while the losses have averaged a little more than 7.5%. The trade – Sadly, the trade is to fade. The stock continues to ride its trend lower. The declining 200-day moving average at $148 would be a level to sell if shares do rally. This turnaround will take time – like turning around a giant ship. Once it turns it should be slow and smooth sailing, but it still needs time and a possible test of the lows around $125 would be a better long term entry point. Let’s look at the charts on multiple time frames. First the one-year daily. Since its summer rally we continue to make consistent lower highs and lower lows and can’t gain traction. Look for a potential re-test of the summer lows around $125 given the constant cloud of uncertainty – that could be the best place to enter the stock from a risk/reward perspective. When in doubt – back it out. Let’s look at a 5-year weekly chart. This confirms selling a rally at the $148/$150 level – years of overhead supply. We see similar patterns in Old Dominion and Schneider – so it’s not specifically a JBHT issue, but a sector-wide issue. Long term charts confirm that the $125 level may be a better place to enter the name and park it away for some time. While we may be closer to a tradable bottom, it takes time for these stocks to turn around. The good news is there is a lot to reverse, the bad news is the path ahead is far from clear. If we do get a trend change, we will need to see the stock clear and stay above $150. It may take more certainty on the trade front for the truckers, JBHT and the entire transport sector to finally join in this bull run. That would be music to the ears of old Dow Theorists. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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