Today we are going to look at the Transportation sector. This, of course, includes railroads, airlines, trucking and shipping. All of these are highly dependent on the strength of the economy. When the economy is doing well, business need to transport their goods to the customers. This is why the Dow Jones Transportation Average has gained over 30% in the last two years while the major Dow index has stayed basically flat.

Below we have provided a weekly chart of the Dow Jones Transportation Average that goes back to 2001. You can see that the last three years have shown a major increase but it seems to have stalled in the last few weeks. We think that this is just temporary however and that the index should start to head higher again soon, especially if the economy continues to do well. We believe that it could reach 5000 by the end of the year. Our stop point would be 3800 because of the triple top that was formed during 2005 and that is also the current 50 week exponential moving average.

A variety of good economic data has been released about the transports recently. Railways especially are doing well. The nation's railways started increasing prices in 2004 and revenue has been going up since then by about 10% per year and the outlook remains good. FedEx and UPS have also been showing good profits in the last year. Of the twenty names in this index, the group has been led by Landstar (LSTR), Norfolk Southern (NSC), and Alexander & Baldwin (ALEX). All of those, however, look to be at the end of long bull runs...tread lightly. Other transport stocks may offer a little more potential (but all of them have done better than the Dow's recent dry spell).

If you want to invest in transports the easiest way is to buy the iShares exchange traded fund, symbol IYT. This tracks the Dow Jones Transportation Average exactly. Of course, you could also invest in one of the many companies that are in the sector, besides FedEx (FDX) and UPS (UPS) which we mentioned above, there is Union Pacific (UNP) and Jetblue Airways (JBLU). There are, of course, also a variety of mutual funds that invest in transports.

Price Headley is the founder and chief analyst of BigTrends.com.