The Dow Jones Transportation Average remains one of the leading themes for 2013, outpacing the gains in the S&P 500 and Dow Jones Industrial Average by more than 3%. Despite the 21.97% year to date gain, continual EPS beats by names like Union Pacific (UNP) and Ryder System (R) will likely push this sector to all-time highs once again.

A LOOK AT THE TECHNICAL PICTURE

On the daily chart, the transports snapped a four day losing streak on Friday, following through on the intra-day reversal from Thursday. This is also significant in that the low for the week occurred just above the critical 6350 prior resistance, which now acts as current support. A strong close above the 6608 resistance level could elevate the index an additional 50-100 points before profit takers step in. Now is the time to consider taking a bullish position in the iShares Transportation Average ETF (IYT) or some of the components in it like J. B. Hunt Transport Services (JBHT).

OPTIONS TRADE IDEA

Buy the (IYT) Aug. $116/$119 Call Spread for a $1.20 debit or better
(Buying the Aug. $116 Call and selling the Aug. $119 Call, all in one trade)
Stop loss- None
Upside target- $2.50-$3.00

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