The iShares Transportation Average ETF (NYSEArca: IYT), which tracks the Dow Jones Transportation Average, is higher by more than 11% over the past month, indicating the cyclical sector fund is mounting a comeback of sorts.
According to the U.S. Bureau of Transportation, the volume of freight transported by road, rail, air, barge and pipelines has been flattening or lower since the end of 2014, Reuters reports. Meanwhile, stubbornly low energy prices may help the transportation industry cut down on costs.
Transportation stocks were expected to benefit from lower oil prices and while that has been the case for airline stocks, other industry groups represented in IYT, including railroads, have struggled. Railroad operators, which are nearly 22% of IYT’s weight, making that the ETF’s third-largest industry allocation, are giving investors cause for concern with transportation stocks.
The good news for investors is that although transportation stocks and IYT struggled last year, the ETF’s recent surge has improved its technical, indicating more gains could be on the way for the fund.
“The weekly chart is positive with the ETF above its key weekly moving average of $129.56 and above its 200-week simple moving average of $128.38. The weekly momentum reading is projected to rise to 33.30 this week up from 26.07 on Feb. 19,” according to TheStreet.com.