After a Cool Drink, Transports Back on the Rails Higher

The Transportation Index took a much needed rest, from the start of 2015 until the end of that year. During that time the rest of the market did not do much but while the Transports gave back nearly 30% of their value. They showed some promise at the start of 2016, rising 20% quickly in the first 2 and a half months, but then that fizzled out. They moved sideways for the next 8 months.

So as the stock markets entered November, with the Industrials, S&P 500, Russell 2000 and Nasdaq 100 sitting at record highs, the Transports were still 12% below their high water mark. The election ignited the markets though and this time the Transports participated. They rose over 15% in 5 weeks, finally making a new all-time high. Since then the Transports have digested that move.

Now as earnings are coming out it looks as though the Transports have caught their breath, and refreshed themselves for another leg higher. The chart above shows a Cup and Handle pattern triggering on a weekly timeframe. This pattern would set a target on the upside to 210 on the Transports ETF ($IYT). Skeptics would point to the RSI on the edge of being overbought and the MACD flat lining as risks of a pullback. But one need only look left on the chart to the run from mid 2013 through 2014 to see both can maintain these levels for a long time.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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