Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Random Thoughts: Are Transportation Stocks Forecasting a Decline?


Fundamentals and psychology square off into quarter-end.


Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

Norfolk Southern (NYSE:NSC) messed the bed Wednesday night, substantially cutting its third quarter forecast. This follows a similar slash by Federal Express (NYSE:FDX) as the slowdown in global growth manifests in the transportation stocks (FedEx has a 10% weighting in the transportation index, and Norfolk has 7%).

I read a research report yesterday where a brave bull opined "divergences no longer matter; all that matters is the open-ended QE-normous (my wording) and percolating performance anxiety into quarter and year-end. For fund managers playing ketchup, time is most definitely not on their side.

That might prove true-the structural and psychological metrics have trumped market fundamentals for a long time-but we would be wise to see both sides, even if the tape is in "bend, not break" mode and expiration looms large.

Check the chart below; history doesn't always repeat but it often rhymes.

Random Thoughts
  • They threw a LOT at yesterday's tape-fundamental softness, China trading at 2009 levels (it was flat last night), overbought conditions-but you could almost hear the bulls burp at the end of the session (as they digested the supply).
  • I resisted the urge to punt my QQQ (NASDAQ:QQQ) puts into yesterday's slippage as I sensed expiration was pulling the QQQ toward $70 (pin action).
  • I also resisted the urge buy back the Facebook (NASDAQ:FB) (that I sold as a trade) as it seemingly has favorable risk-reward relative to the high-fliers (although on a P/E basis, it's still more expensive than many of said high-fliers).
  • When it doubt, sit it out, and that's what I did while maintaining my buy-stop above.
  • There is a very fine line between stubbornness and patience-it's called the bottom line. Remember to respect-but never defer to-the price action.
  • France's richest man has applied for Belgian citizenship-as a large tax increase for the wealthy approaches. While he promises to still pay French taxes-including the planned new 75% tax rate on incomes of more than €1 million-the timing is more than curious. You can never cage free will, right?
  • Take care of the minutes and the hours will take care of themselves; good luck today, and have a great weekend-you most certainly earned it!

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
Position in QQQ

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos