Transportation stocks are followed closely by most traders and investors who look to the group as a leading indicator. In fact, the transports made a short-term top on January 16, which was ten days earlier than the S&P 500 Index top. This just shows how the transports often lead the major market indexes.
Since the January transport top, many of the leading transportation stocks have sold off sharply. United Parcel Service (NYSE:UPS) is a market-leading transport stock that has declined by over $19 since that transport peak. UPS is trading lower by 0.32 to $116.14 a share, still above its 200-day moving average at $115.11 so there will be some daily chart support around this area. Should the 200-day moving average fail to hold as support, there will be one more major leg lower for UPS stock price. The next major chart level for UPS will be around $110., which is where the institutional money should defend the stock. Traders should note that this is where the stock was sponsored in late July 2017 and it will likely be a buy area again when retested. This is where I will look to trade UPS on the long side.
