Riding the Rails: Bullish Signals in the Transportation Sector

The transportation sector is often seen as a bellwether for the overall economy. When the movement of goods is strong, it suggests economic activity is robust. Recently, the Dow Jones Transportation Average (DJT) has been flashing some interesting signals that merit a closer look as it attempts to breakout. Sector rotation fuels the engine of a bull market.

DJT Weekly Chart: Bullish Indicators on the Horizon

Starting with the DJT, the weekly chart reveals a bullish MACD crossover, which is often a precursor to upward momentum. Additionally, we see a momentum breakout on the RSI, breaking above the 50 level. This confluence of indicators suggests that the transportation index could be gearing up for a move higher.

MATX Weekly Chart: Cup and Handle Breakout

Next, we zoom in on Matson, Inc. (MATX), a shipping company that’s integral to the transportation sector. On the weekly timeframe, MATX has formed a textbook multi-year cup and handle pattern. This pattern is widely recognized as a bullish continuation signal. Recently, MATX has begun breaking out of the handle, indicating potential for a significant upside move.

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MATX Daily Chart: Bullish Trendline Bounces

To add more weight to our bullish outlook, let’s look at the daily chart for MATX. The stock has consistently bounced off a well-established bullish trendline. These repeated bounces show strong support and investor confidence at these levels. As long as MATX continues to respect this trendline, the bullish case remains intact.

Transocean Ltd. (RIG): Battling Resistance

Lastly, let's take a look at Transocean Ltd. (RIG). The weekly chart shows RIG fighting the Anchored VWAP from its most recent bottom, which is acting as resistance. RIG closed right at this AVWAP last Friday and also retested its downtrend line. Importantly, RIG found its most recent bottom at the 61.8% Fibonacci retracement level, indicating a strong support base. If RIG can clear this AVWAP and break out above the trendline, it has significant room to run to the upside. This breakout could signal a strong bullish move, making RIG a stock to watch in the coming weeks.

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