Knight Transportation, Inc. and subsidiaries is a short-to-medium haul, dry van truckload carrier of general commondities. For the FY ended 12/31/00, revenues increased 42% to $216.9M. Net income rose 15% to $17.7M. Revenues reflect the expansion of the Company%s customer base, increased volume from existing customers and the acquisitionof Action Delivery Service. Earnings were partially offset by the increase in average fuel prices.

May 13, 2001

Knight Transportation, which is in the short-to-medium haul trucking business, was able to establish a new 52-week high last week. The stock has been ensconced in a well-formed up trend since late March when KNGT muscled over its 50-dma. The rally could continue on the heels of Thursday's 3:2 split announcement. The split will be paid on June 1st. KNGT could also be a beneficiary of the Fed's aggressive rate cutting. Transportation company profits are strongly influenced by economic cycles. It is becoming increasingly evident that we will be able to avoid a recession and that fact alone should result in growing profits for KNGT, as their clients ramp up operations. Technically speaking, KNGT is at a crossroads. The stock did find resistance at $27.97 and could find more resistance at the all time high of $28.50, which was established in December 1998. The MACD is threatening to actually issue a sell signal. Therefore, one might want to hold off from entering a position tomorrow if KNGT opens to the downside. That said, an early move to $28.00 or higher, accompanied by midday volume over 35,000 shares might provide momentum investors with an enticing entry opportunity. Traders might want to avoid chasing KNGT if the stock gaps up to $29.00 or higher on the open because a potential retracement move. One technical tool that is indicating that KNGT could continue its rally is the OBV, which is very strong.

Picked on May 13th @ $27.54
Change since picked +0.00
Stop Loss @ $25.75

May 15, 2001

KNGT suffered a round of selling yesterday that knocked us out of this play. The drop was unusual because it was not precipitated by any news. However, the quick exit from this play illustrates the risk associated with stocks that have low average daily volume. The ADV for KNGT is 63,400. The drop was likely due to one major investor that exited his position because KNGT immediately snapped back today. Of course, this is just speculation because we do not know for sure why KNGT suffered from this unusual volatility over the past two days.

Picked on May 13th @ $27.54
Profit/Loss -1.79 (6%) (Stopped Monday @ $25.75)
Best Profit +0.09 (0%)