One way to tell whether the economy is starting to move again, literally, is to look at the transportation sector. In particular, one fund that could benefit from a healing economy is the Direxion Daily Transportation Bull 3X Shares (TPOR).
TPOR seeks daily investment results equal to 300 percent of the daily performance of the Dow Jones Transportation Average. The index measures the performance of large, well-known companies within the transportation industry.
Traders looking at an opportunity in TPOR can note that it has touched down on its 50-day moving average just recently. When looking whether it can keep its upward momentum since the pandemic sell-offs in March, we can use the relative strength index (RSI) as a gauge.
In its one-year chart and at an RSI at 46.13, the fund could be heading into overbought territory, which could present a buying opportunity. In conjunction with another technical filter, in this case the moving average convergence divergence (MACD), the exponential moving average (EMA) is below the signal line.
Typically, you want to see the EMA line cross above the signal line to confirm a potential bullish uptrend ahead for TPOR. Given the fundamentals, however, that trend could be starting to play out as TPOR looks to retrace back to its pre-pandemic levels.
Transportation Sector Evolves Amid Covid-19
Just like most business sectors, the transportation sector is undergoing its own evolution. With a heavier reliance on e-commerce, more deliveries need to be made, which is where the business of transportation is seeing strength.
Per a NBC News article, consumers “have relied on e-commerce to get everything from toilet paper to groceries to puzzles to sweatpants during the pandemic. Online retail sales were up by 32 percent over last year, a figure that wasn’t expected until 2022, according to the digital research company eMarketer.”
“If the pandemic were to continue or a vaccine was distributed right away, it really doesn’t change anything, because this was a train already moving down the track,” said Rich Thompson, who leads the global supply chain and logistics solutions team for the commercial real estate company JLL. “It’s just now accelerating.”
The increased use of online shopping is causing e-commerce giant Amazon to shore up its fleet of delivery trucks. In the same way, the railroad system signaled the rise of the Industrial Revolution, delivery trucks are a sign of the times.
“Parcel deliveries are akin to the creation of the American railroad system,” he said. “These alternative logistics providers are trying to create a private delivery network across the country — because that’s what we need.”
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