Diamonds and Dogs

5/22/15

The Dow Jones Transportation Average is the dog of the day, dog of the week, and dog for the year. While the other major averages are making new all-time highs, the Dow Jones Transportation Average is making new lows for the year down 7%. Each segment of the average is facing different challenges. Lower coal and oil demand is hurting the railroads, increase competition is hurting the airlines, while the truckers are facing their own demand issues. Dow Theory says a real bull market is led by new highs in both Dow averages.  So far in 2015 that has not been the case.

John Deere (DE) ran higher today up 4% closing in on its all-time high thanks to earnings and forecasts for continued growth through the remaining fiscal 2015. The better than expected guidance was due to demand for its construction equipment that mitigated the impact of declining sales of its signature green tractors and combines. Heading into the Memorial Day weekend I suspect a number of us will be riding a John Deere at some point.