Some Dow Theory purists were fretting over the steep underperformance of transportation stocks over the summer but now the sector is outperforming the S&P 500 since the beginning of October.

Since Sept. 28, iShares Dow Jones Transportation Average (NYSEArca: IYT) is up 1.5% while iShares Core S&P 500 (NYSEArca: IVV) has slipped 3.1%. [Transports ETF Makes Up Lost Ground]

“It might be about time for the sleeping giant which is the Dow Jones Transportation Average to finally wake up,” writes J.C. Parets at All Star Charts in a MarketWatch article.

He notes IYT has built a massive base for over a year that could provide a foundation for a lift-off. The potential upside is “pretty tremendous,” Parets says. “This looks to me like a monster base with a ton of upside.”

Also from a technical perspective, Kimble Charting Solutions notes the S&P 500 Railroad Index is at the bottom of a rising channel and has formed a so-called bullish falling wedge.

iShares Dow Jones Transportation Average

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.