The Economic Modern Family Features the Transportation Sector

October 27, 2025

Mish's Daily

By Mish Schneider

While I was away from my desk, the Economic Modern Family stayed busy.

As of today, on the weekly charts, only Sister Semiconductors SMH and Big Brother Biotechnology IBB seem to be as optimistic as the S&P 500, Dow, and NASDAQ 100.

While SMH (Semiconductors) makes a new all-time high, Biotechnology IBB, while doing well, remains under the peak high in 2021.

Plus, Granny Retail XRT and Regional Banks KRE are two of the weakest links in the Family.

Granddad Russell 2000 IWM, sits just below the all-time high price established 2 weeks ago.

All in all, the Family’s price action is mixed and more neutral than bullish.

That is divergence.

Looking at the Transportation sector IYT, the price is barely above the 50-DMA (blue).

From early October until now, the price is stuck in the middle of the high and low of the month.

IYT grossly underperforms SPY looking at the Leadership indicator.

And Real Motion and the red dots have gained momentum, but nothing is all that notable.

So why then, with all time highs in tech and the indices, is this very important sector to the US economy so meh?

The under-performance of the U.S. transportation sector (often proxied by the Dow Jones Transportation Average/ “Transports” index) relative to the Dow Jones Industrial Average (DJIA) and broader equities can be traced to several inter-related structural, cyclical and investor-sentiment drivers.

Markets see weaker “goods/logistics” growth ahead (or are discounting a slowdown) versus the industrial/growth side of the market.
Transportation firms face rising operational costs (fuel/maintenance/labor/insurance)
The move in the economy toward services and digital goods reduces “heavy goods movement” growth as a share of total activity.
Investor perception: if a slower growth/soft landing (or mild recession) is anticipated, transportation lags early, so it is being discounted ahead of other sectors.

Looking back at the IYT Daily chart, 2 closes over the 50-DMA will be positive and a return to a bullish phase.

However, with Regional Banks, Retail, and now this sector so underperforming, we do not want to see this as a canary in a coal mine.

Transportation is more cyclical, facing weak freight/demand growth, margin/cost headwinds, and has a lesser growth narrative compared to tech/growth sectors driving the market.

Weak links cannot become anchors.

Again, before you cross the street, it is always prudent to look both ways.

Limited offer.

Real-Time Trading with Mish

Hi,
For some time now, I’ve been sharing my knowledge and mentoring investors on Slice: a platform built for real connections between mentors and investors. On Slice, you can:

 Connect with me 1:1
 Join group chats with other investors
 Participate in live sessions from time to time

To make it easy for you to join, I’m sharing an exclusive offer:
 Your first month is only $1 with this promo code: “Mish1”
Join Slice Today.  I’d love to connect with you directly and continue growing together as investors.

Warm regards,
Mish,

For more detailed trading information about our blended models, tools, and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

-----Get your copy of
Plant Your Money Tree: A Guide to Growing Your Wealth

Grow Your Wealth Today and Plant Your Money Tree!