The Dow Transports just flashed a major signal––here’s why it matters for markets today.
KEY TAKEAWAYS
The Dow Transports hit a 2025 high and confirmed strength in the Industrials
Dow Theory’s core logic still applies: makers and movers must agree for momentum to be real
Modern logistics make transport data even more critical than in the industrial era
Pandemic lessons showed that movement failures–not manufacturing–break the economy
Transport outperformance signals real demand across freight, travel, and e-commerce
MY HOT TAKES
Dow Theory remains powerful even in a services and digital economy
Transport strength is an honest read on consumption and economic health
Modern logistics are the real heartbeat of the economy
The breakout in transports is a genuine macro message, not noise
When makers and movers align, the underlying economic momentum is real
You can quote me: “Transport stocks don’t lie––they tell you the truth before any economic model does.”
Movers, Makers, and Shakers. I am blessed to work with some of the best journalists in the business. They seek me out for my perspectives quite often, but I will let you in on a little secret, sometimes I learn from them as well. 😉 I wear lots of hats in my role as a Chief Investment Officer. My day always starts with you, my faithful followers. My research and writing covers a minimum of 5 hours each morning. These days, you can tack on another 1 - 2 hours of content creation (video/audio). Then there is portfolio management–you know where the rubber meets the road, so to speak. I don’t just prognosticate, I manage assets. You can say that I put my money where my mouth is. In case you haven’t noticed, things move around quite a bit during the day. To be clear, I have a great team supporting me, but even with all that, it is easy to miss information hit the tape sometimes, although nothing escapes me in my morning research. During the session, I try to read as much as I can from the journalists and other CIOs that I respect. I run many algorithms throughout the day… and night. 🦉 One of my favorite journalists from Bloomberg has on several occasions managed to push some really important things onto my radar. It happened again yesterday.
I was, in fact, scheduled to do a formal interview with him yesterday, and it was pushed due to a scheduling conflict. I was caught up in a number of things, but I heard my Bloomberg terminal chime and saw a message from the reporter apologizing for the push. I replied and thanked him, then I moved on. Turn the clock forward, the closing bell peeled at the NYSE and I started to take notes for my closing commentary. I noticed that my friend responded to the earlier message. He asked me to comment on the breakout of the Dow Jones Transportation Index. I double took. “Hmm,” I thought, “how did I miss that?” Ok, it was late, the market was closed, and I was off to my next meeting, so I wasn’t able to respond, but the idea never left my radar.
Indeed the Dow Jones Transportation Index did surge to a 2025 high in recent days. Its more popular sibling, the Dow Jones Industrial Average, is close to its 2025 high and recently had a moment, outshining even the shiniest tech-heavy indexes as investors rotated into lower-valuation, non-tech sectors. So, both are at or near highs and riding strong. “So, what,” you ask. 👐
“So, what?” Fair question. I’ll tell you what. When you see the Transports ripping like this, you are tapping into one of the oldest, most deceptively simple frameworks in technical and macroeconomic analysis–Dow Theory. Charles Dow wasn’t trying to create a rigid rulebook; he was trying to understand how an economy breathes. In the late 1800s and early 1900s, the American economy ran on factories and railroads. Makers and movers. Industrials produced the goods, and railways shipped them across the country. If the Dow Jones Industrial Average was climbing, that was fine, but if the Dow Jones Transportation Average confirmed the move, that meant something deeper: companies weren’t just producing, they were delivering. Production without movement is nothing more than inventory gathering dust. Movement, literal movement, meant demand, meant consumption (😁), meant a functioning economic engine. Dow believed that if the makers were busy but the movers were not, something was off. That divergence was a warning. When both marched higher together, it meant economic reality was aligning with market optimism.
You can dismiss that as quaint nineteenth-century thinking, but here’s the fun twist: in many ways, the underlying logic is more powerful today than it was then. Yes, we’re no longer a manufacturing-led economy in the classical sense. US manufacturing as a share of GDP hovers around 10% today, depending on the quarter, which is far from the manufacturing-heavy era that shaped Dow’s perspectives. Some estimates put the number closer to 7% if you strip out certain subcomponents. The US has morphed into a services, software, intellectual property, digital-commerce, data-driven colossus. But movement–transportation–is as essential as ever, arguably even more so! Because in an e-commerce world, the “mover” is not just a supporting character. It’s the lynchpin. It is the system.
Think about what we learned during the pandemic. It wasn’t manufacturing that froze the economy. It was logistics. It was the network–ships stranded at ports, trucker shortages, rail delays, warehouse backlogs, parcel carriers stretched to their absolute physical limits. The moment the movers staggered, retail took a hit. Shelves emptied. Delivery windows stretched from two days to “whenever.” And, importantly, this is a theme you know I love, prices shot up. That was the moment supply-push inflation crept into the American consciousness. You didn’t need a textbook to understand it. You just needed to wait three weeks for a box of diapers. It was the failure of movement that created the inflationary shockwave, not the failure of production. So if you want a real-time barometer of consumption, and you know how much I love that topic, you still watch the movers. You still look at who is shipping, carrying, hauling, flying, and delivering.
That’s why the Dow Transports matter today, perhaps more than at any time since Charles Dow was scribbling editorials in the Wall Street Journal. Look at what’s inside the index. UPS, FedEx, and the railroads–Union Pacific, Norfolk Southern, CSX. These are the arteries of American goods movement. When they outperform, they’re telling you that packages are moving, freight is being booked, and the real economy is alive. Add in airlines like Delta and United, and you get the pulse of travel demand, another powerful proxy for both business activity and consumer confidence. Sprinkle in logistics specialists like C.H. Robinson and J.B. Hunt, and you get even more color on the flow of goods across supply chains. When this whole ecosystem–airlines, rails, truckers, parcel carriers–starts breaking out in unison, you pay attention. They’re not driven by hype, or story stocks, or AI enthusiasm, or billion-dollar capex cycles. They’re driven by boxes, bodies, fuel, and operational execution. They’re driven by… wait for it… demand.
And remember, transports are cyclical. They don’t fake it. If the economy weakens, they tell you early. If consumers pull back, they slip. If inventory builds, their volumes drop. And when things are picking up–when households are spending, businesses are replenishing, e-commerce is humming, they surge. What you’re seeing now is strength, not a fluke. And it’s aligning with that old Dow Theory confirmation concept: makers and movers both trending higher. Industrials have been strong. Transports have now joined the party. You don’t need to be a technical analyst to appreciate the poetry of that.
Is classical Dow Theory a perfect tool in a modern, hyper-global, algorithmically traded, services-heavy economy? Of course not. It’s overly simplistic if you view it as a rigid rule. But as a concept, or as a philosophical lens on how goods move, how consumers behave, how supply chains function, and how economic vitality expresses itself, the theory has aged beautifully. The logic remains clean. Confirmation matters. When the people who make things and the people who move things are both signaling strength, it is rarely an accident. It is often the real economy whispering that momentum may be building underneath the surface.
So yes, maybe it was my journalist friend who pushed the breakout onto my radar this time. It won’t be the last. Their eyes are on the tape all day long, catching the glimmers and tremors that even someone who lives in front of a Bloomberg terminal 🤓 can occasionally miss. For that, I give them a tip of the hat. They’re the movers of information, just like the transports are the movers of goods. They keep the system flowing. And when they flag something worth watching, I always pay attention. 😉
YESTERDAY’S MARKETS
Stocks gained yesterday, sustained by hopes that the Fed will cut its key interest rate in next week’s FOMC meeting. ADP reported net job losses last month strengthening a case for rate cuts. Bitcoin staged a bit of a comeback adding fuel to the speculative fire.
NEXT UP
Initial Jobless Claims (November 29th) is expected to come in at 220k, slightly higher than last week’s, on-time 216k claims.
Important earnings today: Brown-Forman, Dollar General, HP Enterprise, Docusign, Kroger, and Ulta Beauty.