We have been noting the relatively bullish look of the Transports (and the Airlines) in weekly reports and yesterday Tranny broke upward, only to be reversed today. I saw the breakout news broadcast at multiple outlets and it is fitting for that to get punished today. But given the bullish looking pattern it has formed over the last few months, I thought I’d spotlight it for anyone interested. Let’s call this a regular NFTRH update as well, since so many people watch the Transports for positive and negative market divergences. It has been positively diverging on the short-term.
Using the Transports iShares (IYT) let’s first look at the daily situation. There was a break upward on volume yesterday and today is the drop to short-term support. The ETF remains in a bullish stance at or above 144 and the 50 day moving averages.
The weekly view shows that yesterday’s pop was right up to a resistance area. But the weekly chart does have positive MACD & RSI going for it. The weekly EMAs 20 and 12 agree that the 143-144 area is short-term support, while the EMA 60 (currently around 141) has supported IYT since July. The theoretical target would become an actual target if IYT were to clear current resistance.
I am not going to put in formal buy, sell, stop parameters but the ETF has already fanned out of a bullish looking pattern, hit resistance and is pulling back. A hold of 140 keeps the upside potential in play and a break above 150 loads the target. Below 140 starts to break the play down.
A reminder that chart based NFTRH+ updates are technical trade setup ideas, which may not be revisited as the buy, sell, stop parameters are already noted. They are meant as a starting point for further research if interested. I will not personally buy every item highlighted and will sometimes sell – without prior notice (because this takes time and resource away from NFTRH’s main functions) – any item that I do buy, below target, which is something I often do as a trader. Also please be aware that I am not a fundamental stock analyst. Due diligence is your responsibility.