Figuring Out The Transports And Avoiding The Rust

person using MacBook Pro on table

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They’re not making it easy. But do they ever? Yes, they do. Who is “they,” you may ask? I’m not really sure, but I seem to use the pronoun a lot.

Let me give you an example of one thing that has confused me lately. Look at the two charts below. The first one is the Dow Jones Transportation Index, which is made up of thing like airlines, rails, truckers and shippers. It is nowhere near its August 2023 peak, which is concerning.

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Now let’s look at the second chart, which is the ETF that trades the transports, the iShares Transportation ETF. It is well above the peak from last summer, and it actually looks like one of the super stocks.

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How can the same sector offer such different results? I found no conspiracy. The TRAN ETF has 20 components, while the IYT has 48. That's a big difference. The IYT’s largest component, UBER, isn’t even in the TRAN. Do you want to guess how UBER is doing after looking at the IYT chart above?

Take a look at the chart below. IYT’s largest position looks like Nvidia. We own it in our Unloved Gems strategy, and similar to how we trimmed Nvidia several times, we will probably do the same thing here.

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The government released the Producer Price Index (PPI) data on Friday, and we already saw the Consumer Price Index (CPI) come in on the hot side on Tuesday. This trend continues to support my thesis that 3% is the new 2%, and inflation will have a tough time getting back to the Fed’s target without recession.

We have a three-day weekend in front of us to observe President’s Day. I am old enough to remember having off for Lincoln’s birthday, as well as Washington’s. It seemed a little much, being so close together. As Neil Young once said, when you rest, you rust. I am trying my hardest to avoid any rust.

On Wednesday, we bought DXHYX, EAT, and more FDLO and RYCIX. We sold FENY and levered the S&P 500. On Thursday, we bought FFEB, GSG, TLT, FSTA, BMY, EMB, PCY, and PMPIX. We also sold some of QQQ, AIG, and DXHYX.

More By This Author:

One Day Wonder Or The Start Of A Big Decline
Dotcom Bubble It Ain’t – Anatomy Of A Sale
But It’s Only 6 Stocks And It Looks Like The Dotcom Bubble

Please see HC's full disclosure here.

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