Sam Collins

Look to Buy Transportation Stocks

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Friday's modest decline, following five days of gains and new highs for the year on the Dow Jones Industrial Average (DJI), must be considered just a bit of profit-taking.

The market had a psychological reason to pull back, that, of course, being the eighth anniversary of the 2001 terrorist attacks. Curiously, as pointed out by the Wall Street Journal, Friday's close was just a 10th of a point below the close of the day of those attacks at 9,605.51.

But, while the broader indices were declining, the Dow Transportation Average (DJT) continued on a very sharp advance, up 2% on Friday and up 5.6% for the week. This should encourage the bulls, since the index, which is made up of trucking, rail and shipping companies, is considered one of the most reliable indicators of a turn in the economy since these companies are the first to directly benefit from new orders.

FedEx (FDX) jumped 6.4% after it said that better-than-expected volume in international shipments is helping its performance. FDX also said that it should easily exceed analysts' Q1 earnings forecast of 44 cents.

At the close, the Dow was off 2 points to 9,606, the S&P 500 (SPX) fell 1.41 points to 1,043, and the Nasdaq (NASD) lost 3 points to 2,081.

The NYSE traded 1.3 billion shares with advancers ahead of decliners by 8-to-7. On the Nasdaq, decliners were ahead by 3-to-2 and volume totaled 660 million shares.