It was only a few weeks ago that it looked like they were headed for real trouble, even more than the rest of the market was facing. However, over the last several days, the transportation stocks have resumed their leadership position. More than that, it looks like they're poised to keep leading the pack. As such, we're back to bullish on the sector, although it may pay to pinpoint the hot and cold spots within the group.

The Dow Jones Transportation Average (DWTX) closed at 4441 on June 13, as the final culmination of a rather ugly turn. Since then, however, the index has gained 11.6%. For comparison's sake, over the same timeframe, the Dow Jones Industrials have only gained 4.6%, and the NASDAQ has only gained 5.1%. So clearly, the chart's impressive move recently has not been an optical illusion - it really is leading the market. More than that, the chart's momentum suggests it could continue to do so. One of the few indices that's anywhere near its 52-week high, a break that mark (at 5013.67) would be a very bullish signal. And given that we're only 57 points away from doing that, it wouldn't take much to see it happen. In that light, although we're bullish on the transportation stocks, waiting for that final barrier to be broken would be a prudent idea. You'd only be leaving about 1% worth or movement on the table. If the resistance at 5013 falls, then we'll target a move up to 5500 (or about 10%). Stops on the bullish bias at that point would be at the 20 day line.

Dow Jones Transportation Average - Daily

As far as what the key driver is behind the sector trends, most of the strength is attributable to marine transportation and trucking. The railroads and air freight stocks lagged, while the airlines themselves pretty much mirrored the Dow Transportation Average. While we have our favorites among these five industries, we also have enough time and space to look at each one individually. A chart of each appears below.

Marine Transportation: Since June 13th, up 14.0%. Although it clearly is the main beneficiary of the strong push in the sector, it also poses the greatest risk of a pullback now. On the flipside, this was the only group to sink in the first half of 2006, so it was due for such a bounce. The best move here may be to wait for a pullback and buy on a dip - once (and if) the uptrend resumes. This industry includes Overseas Shipholding Group (OSG) and Tidewater Inc. (TDW).

Trucking: Since June 13th, up 13.8%. Although the trucking stocks surged by almost as much as the water transportation stocks did, they don't include the same degree of overbought risk. Instead, these stocks made a gentle dip on the 28th, and have recovered quietly. What's interesting is that over the last two days, the index has actually moved on to new 52-week highs...another bullish sign. This industry includes J.B. Hunt (JBHT) and Con-Way (CNW).

Airlines: Since June 13th, up 12.0%.These names rallied side-by-side with their peers in the initial days of the rebound. However, it's concerning that they were also the first to taper off. The airline index is also the only one of the five that's not higher than it was at this time last week. That doesn't make for a very bullish case, relative to the other charts. This industry includes AMR Corporation (AMR) and UAL Corporation (UAUA).

Railroads: Since June 13th, up 10.3%. Don't get too worried about the fact that they've lagged. The chart looks good, and the momentum is still in the building stages. Of all five groups, this one might be our favorite in that it still has lots of room to run. This industry includes Burlington (BNI) and Union Pacific (UNP).

Air Freight: Since June 13th, up 8.6%. These names hung in there with the rest of the sector, until Friday, when they actually moved lower. Although we like the strength and size of the move, things look a little too shaky right now for these stocks, If they can stabilize, and the upward-movers regroup, it would present a much more compelling scenario here. Note that some of these equities are on the verge of new 52-week highs. If they actually get past that milestone, we won't be quite as hesitant. This industry includes UPS (UPS) and FedEx (FDX).

Dow Jones Transportation Industries - Daily

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