Fed-Ex’s Gloomy Outlook Does Not Bode Well For This ETF (IYT)

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June 17, 2009 9:10am ETF BASIC NEWS NYSE:IYT

fed-exSamantha Bomkamp from  the AP reports that “FedEx Corp. on Wednesday warned it expects “extremely difficult” conditions in the next two quarters, after the nation’s second largest package shipper posted a bigger fiscal fourth-quarter loss due to hefty one-time charges and lower revenue.” 


As the economy is starting to stabilize “FedEx predicted earnings in its first-quarter well below what analysts forecast. The company sees a profit of 30 cents to 45 cents per share for the period ending in August, compared with analysts’ consensus forecast of 68 cents per share. FedEx posted a profit of $1.23 per share for the same period a year ago,” Reports Samantha Bomkamp.

The executive vice president and chief financial officer  Alan B. Graf Jr. of Fed Ex said  “that sluggish manufacturing activity and another run-up in fuel prices will hold back earnings in the company’s first and second quarters. On Tuesday the government reported industrial production fell by 1.1 percent in May — marking the seventh straight monthly drop. Oil prices have doubled since March on hopes the worst of the global economic slowdown may be over and fuel demand will rise.”

These comments from Fed Ex prove that the economy is still struggling.  These transportation companies provide a great sense on whats going on out there, because they transport goods from producers to the end customers.

One ETF that could struggle with this news, is the iShares Dow Jones Transportation Index “IYT”.  The index includes companies in the following primary groups: airlines, trucking, railroads, air freight, transportation services and industrial services.  I have included a list of the top 10 holdings of the ETF below:

TOP 10 HOLDINGS ( 71.51% OF TOTAL ASSETS)  
 
Company Symbol % Assets
Alexander & Baldwin N/A 5.67
BURLINGTN N SANTE FE BNI 11.18
C.H. Robinson Worldwide, Inc. CHRW 5.27
Expeditors International of Was EXPD 5.56
FEDEX CORP FDX 9.43
G A T X CP GMT 5.73
J.B. Hunt Transport Services, I JBHT 5.31
NORFOLK SO CP NSC 5.88
UNION PACIFIC UNP 8.19
UNITED PARCEL SVC UPS 9.29

Full Story: Here


 

We ran this transportation ETF through the market club software and found the following results from their chart analysis program:

iShares DJ TRANS AVG ETF (PACF:IYT)
Smart Scan Chart Analysis indicates a counter trend rally is underway The current up-trend could be changing and moving into a trading range Sidelines Mode.Based on a pre-defined weighted trend formula for chart analysis, IYT scored +55 on a scale from -100 (strong downtrend) to +100 (strong uptrend):
     
-10 Last Hour Close Below 5 hour Moving Average
-15 New 3 Day Low on Wednesday
-20 Last Price Below 20 Day Moving Average
+25 New 3 Week High, Week Ending June 13th
+30 New 3 Month High in May
+55 Total Score

 


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