Listen to FedEx and the Dow Transports

Wow!! Those were some fireworks.  No, we're not talking about those lights in the sky, but rather those lights last week on our computer screen.  In one week, we saw the S&P 500 go up 5.6%, and probably more important, we saw the Dow Transports soar up 6.4%.  The economically-sensitive Dow Transports Index measures what the stock market thinks about those industries that carry the goods that consumers order.  And one stock in particular, FedEx, often provides a telling tale.

FedEx's stock had a fantastic week last week.  There is no doubt that the near 1929-1932 financial bankruptcy repeat in 2008 hit the "FedEx Economic Indicator" hard.  It was sending a message that this one could be the killer - not only for the US, but for the world.  The economic headline trip out of this disaster is still in the headlines, but you can see a little different message from FedEx's stock in the chart below.  It has not signaled the all-clear break-out...yet.  But if this stock breaks out above that shoulder level of 98 1/2, it will be fantastic anecdotal evidence that the "singing" in the market has started.

Click to view larger image.

Furthermore, the Dow Trasports Index made a new all-time record high last week.  As the headlines are trying to paint a somber picture for stocks over the last 12 years, the story that the Dow Tranports is telling us is much better - not only for the US, but for the global expansion and the expansion of freedom, democracy and free enterprise throughout the world. 

The world still has a lot of work to do, especially as it recovers from that horrible bear market in 2000-2003 and the financial crisis of 2008.  But as the Dow Transports breaks out to new highs, it is telling us that the headlines of tomorrow are about to start looking better.

Don Hays

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