Given the recent moves that airline stocks have made over the past few quarters, all eyes are on the transportation sector. However, the focus has mostly been on airlines, while the rally in trains and trucking transports has been largely absent. Recent moves in Union Pacific Corp (UNP) and its small push higher within the SIA S&P 100 Index Report have caught attention, especially considering the massive gains seen in the airline sector. After reviewing most of the railway stocks, it appears Union Pacific may be shaping up the best from a technical perspective. Even on a massive down day in the market, where many stocks are plummeting, Union Pacific stock remains firm and slightly up. There is no breakout to report, and the stock is still far from capturing the top of the matrix, but each day the market is down and UNP is up, it continues to build its relative strength readings. Currently ranked #24 in the SIA Transportation Sector Index Report and residing in the SIA neutral zone, there is still much work to do on a relative basis to become a top name but it’s very noteworthy, especially given the strong move in the airline sector, with names like United Airlines (UAL) up 157% over the past year.
Let's begin the railway review with a baseline technical reading on UNP, where the shares have remained stuck in the same trading range for the past year, between $219 and $252. Resistance is found just beyond the previous high at $262.70, where a move to this level would form a double top pattern. A move to this level would allow point and figure technicians to calculate a point-and-figure target of 17 box sizes based on the entire past 4-year consolidation range, but the more conservative approach could be $307.80 which is consistent with the nearer consolidation range, as well as the psychological trading level of $300, which most traders view as a natural digestion level after a measured move. This is in the context of the SIA transportation sector, which is currently in the neutral zone of its SIA sector report, but has moved up 3 spots in the past quarter. While the SIA Transport's move up on the sector matrix was initially associated with the airline sector, the big question now becomes: Is this momentum spilling over into broader transportation sectors like trains and trucks? Or is it isolated to the planes for a completely different fundamental reason?
The attached SIA candlestick chart provides another vector of analysis, showing a well-defined upsloping trendline (highlighted in green) with overhead resistance (highlighted in red). It appears that as we enter the nip-point of this conjunction (green and red lines), the past 4-5 years of consolidation may soon be headed to a resolution with either a breakout to the upside past resistance or a breakdown through long-term support.
Meanwhile, the current SMAX reading of 7/10 represents the positive technical attributes of the stock compared to a basket of other asset classes, not just within the SIA S&P 100 Index Report. In the coming days, the SIA transportation sector will be revisited, with a review of names like Ryder Systems Inc. and small-cap Hub Group Inc. to assess how the trucking sector and intermodal transport are performing.
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