Transportation stocks like CSX Corporation (NASDAQ:CSX) (earnings) and United Continental Holdings (NYSE:UAL) (earnings) took a hit on Wednesday after reporting earnings. Both transportation giants are putting pressure on the highly followed iShares Transportation Average ETF (NYSE:IYT), which was trading lower by 1.40 percent mid-day Wednesday.
Traders and investors track the transportation sector as a leading indicator for the overall market. At this time, the transport sector is still in an up-trend as it remains above its 50-day moving average on the daily chart. So Wednesday's decline is nothing more than a pullback. This moving average is very important for the trend and is watched by many institutional traders. A daily chart close below the 50-day moving average could signal trouble for the transportation sector and the overall stock market.