Dow Transports May Lead Industrials to Record: Chart of the Day

The Dow Jones Industrial Average is better positioned to set a record now that its transportation-stock counterpart has done so, according to Richard Moroney, editor of the Dow Theory Forecasts newsletter.

As the CHART OF THE DAY illustrates, the Dow Jones Transportation Average has led the Dow industrials throughout the current bull market, which started in March 2009. Yesterday the Dow transports closed at 5,639.64, an all-time high. The average had climbed 6.3 percent for the year, its best performance through Jan. 15 since 1987.

“It’s a legitimate move,” Moroney, who serves as the chief investment officer at Horizon Investment Services LLC as well as the newsletter’s editor, said yesterday in a telephone interview. “I take it as a positive.”

All 20 companies in the Dow transports had gains for the year as of yesterday. Delta Air Lines Inc., the world’s second-largest airline, set the pace by rising 15 percent. Most beat the Dow industrials’ 3.3 percent advance for 2013 as well.

Fourth-quarter earnings reports will largely determine whether the industrials reach a record any time soon, according to Moroney. The average would have to advance 4.7 percent to surpass its peak of 14,164.53 in October 2007. It’s 0.6 percent away from beating last year’s high.

JPMorgan Chase & Co. is the first of five Dow industrial companies scheduled to report this week. Earnings from Bank of America Corp., Intel Corp. and UnitedHealth Group Inc. are set for tomorrow, and General Electric Co.’s results are due the next day.

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