Ways to trade Dow Jones transportation average using etf

The Dow Jones transportation average is the oldest Dow Jones stock market index. It was created in 1884 by Charles Dow. This index tracks performance of major companies from the transportation business in the USA.

This transportation average is part of group known as Dow Jones averages that also includes the well known Dow Jones industrial average and Dow Jones utility average. These three Dow Jones averages were the first stock market indexes in the world so they have a really long history.

Companies included in Dow Jones transports index

The actual list of companies included in the Dow Jones transportation average index can be found in many places. I have selected the list described on the Yahoo finance site today (07/2012). There are 20 transport companies in this DJ average index.

ALK … Alaska Air Group, Inc.
CHRW … C.H. Robinson Worldwide, Inc.
CNW … Con-Way, Inc.
CSX … CSX Corporation
DAL … Delta Air Lines Inc. (New)
EXPD … Expeditors International of Was
FDX … FedEx Corporation
GMT … GATX Corporation
JBHT … J.B. Hunt Transport Services
JBLU … JetBlue Airways Corporation
KSU … Kansas City Southern
LSTR … Landstar System, Inc.
LUV … Southwest Airlines Company
MATX … Matson, Inc. Common Stock
NSC … Norfolk Southern Corporation
OSG … Overseas Shipholding Group, Inc
R … Ryder System, Inc. Common Stock
UAL … United Continental Holdings
UNP … Union Pacific Corporation
UPS … United Parcel Service, Inc.

Chart analysis of Dow Jones transports index

I personally like to do analysis of all indexes and exchange traded funds in my preferred stock analysis software. So here is a chart from my personal analysis software. I like to analyze multiple time-frames and you can see the Dow Jones chart with a daily and also with weekly time-frame situation.

Only multiple time-frame situations on the transportation average chart could provide a global global picture of the situation with Dow Jones averages. The short-term view could signal one outcome but it pays to check the longer-term view also, to know what is mid-term trend.

The actual situation on the DJ transportation average charts above is quite neutral. There is no significant trend in the Dow Jones transportation sector.

Dow theory info

There is one theory that is used by todays investors. It is known as the Dow Theory. The simple usage of this theory uses the idea that any uptrend move in th eDow Jones industrial average index should be confirmed by a similar move in the Dow Jones transportation average index.

It depends on the stock market trading and investing approach of each single investor if he/she will also use this basic theory.

Dow Jones etf for this index

I use iShares Dow Jones Transportation Average Index Fund that tracks this specific transportation sector and is linked to this DJ market index. It is in the list of ETFs I regularly analyze and trade in my ETF trading strategies. The stock market ticker for this Dow Jones transports index fund is IYT.

Strategy basics for Dow Jones etf

The basics I use for trading this Dow Jones transportation average index fund are quite simple. First I have to check the broad market situation and define what is a preferable strategy for my ETF trading system. Should I prefer bullish trades or bearish trades with sector exchange traded funds?

Then I like to have this exchange traded fund picked as the best ETF for my pre-selected strategy. And finally I apply knowledge of simple technical analysis tools like chart patterns, support and resistance levels and try to prepare a breakout or pullback ETF trade setup. There must be risk management and money management rules applied too in this process to ensure the best risk reward ratio for any particular trade that could happen with this Dow Jones index fund.