Don’t look now, but trouble be brewin’ in the transport (NYSE:IYT) space. The past two weeks have seen five days of high-volume selling. With distribution on the rise and a test of the 50-day moving average imminent, things look a bit precarious.

Pundits looking for a palatable causation story will likely cite the recent rise in oil as the culprit for the transports’ demise. No doubt many with a short-term memory would concur. Since the beginning of the month, crude oil is up 9% while transports are down 3%.

Unfortunately, such a conclusion is not only oversimplified but grossly overused every time high oil prices come to the forefront.

Though the correlation between oil and transports has turned notably negative over the past month, it spent the majority of 2011 in positive territory. That is to say, both assets exhibited a strong tendency of moving in the same direction. This evidence certainly casts a dubious light on the assertion that rising oil prices kill transports.

Some would go a step further and contend it’s not so much rising oil prices that hurt transports, but rather the elevation of oil to a high enough level (such as $100 or $110) that finally takes its toll. Such an argument certainly appeals to one’s intuition.

Yet, I’m not so sure recent evidence corroborates the theory. In early 2008, when crude rose from $100 to $145, transports actually rallied for the majority of the surge.

We also could consider last year’s February-to-April rise of crude from $85 to $115. Though the initial pop coincided with a drop in transports, they came back and rallied strong during March and April. So, yet again we have transports rising in the face of strong oil.

The common argument that high oil threatens the performance of the transport sector is shaky at best. With such a fuzzy correlation, it’s also difficult to time. One day transports outright ignore the price of crude, the next day they care immensely.

Click to Enlarge Here’s the bottom line: Don’t get caught up in the oil-transport correlation argument. The actual chart of the transport industry should guide you when trading transportation stocks, not the price of crude. And right now the chart is flashing a warning sign.

Consider taking protective measures on transportation stocks in your portfolio such as selling covered calls, buying puts, or ratcheting stop losses higher.

As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.