Transportation Sector should expect a lot Of Volatility over the Next Few Months

Implications: I believe it safe to say that the Transport Sector should be receiving a great deal of play over the next few months. And like the rest of the market, one can expect a great deal of volatility due to the price of oil, the economy, Presidential politics, depleting capacity and the determination of this administration to stimulate the economy by the 3rd quarter, no matter the cost.

Analysis: Although this author has stated on several occasions that he believes that there will be enough of an economic bump by 3rd quarter to at least stabilize transportation / trucking rates, it does not mean that the sector won’t look different by the time it gets here. And although I would not begin to suggest to anyone (I have a tough enough time picking winners myself) how to pick stocks, I would suggest that the basket of transportation / trucking stocks you start with be operationally sound first and then implement your trading strategy.  

Many transportation / trucking companies look different operationally than they did a year ago, and although there may disagreement as to what model holds the greatest promise for the future, there is very little disagreement that several companies have been severely wounded over the last 18 months; and even though the transportation sector posted strong gains yesterday following an upgrade of Overseas Shipholding Group Inc. by Citigroup and ahead of the ¾ point Federal Reserve's interest-rate cut, there are still a lot of troubled companies.  

Yes, transportation stocks typically do well on the back side of an economic recovery, but remember that is after the market has reached its bottom and contrary to what a lot of people believe, I am not certain that we have found the damn thing yet. And until the financials stabilize, any bottom may not be solid.