Transportation Stocks Mired In Weakness… But For How Long?

All is not well in the land transportation stocks. Summer is here and the major stock market indices are trading near or at all-time highs…

And the Transportation Sector ETF (IYT) is in a 3 month down-trend and grinding lower.

Today we look at a “weekly” and “daily” chart to highlight why I think transportation stocks are trading at a pivotal juncture.

Either bulls turn this ship around quickly, or it could be another 10-15 percent decline.

Note that the following MarketSmith charts are built with Investors Business Daily’s product suite.

I am an Investors Business Daily (IBD) partner and promote the use of their products. The entire platform offers a good mix of technical and fundamental data and education.

$IYT Transportation Sector ETF “weekly” Chart

The weekly chart is the best glimpse for bulls. Although momentum is still heading lower and relative strength waning, the shape of the strong move higher and consolidation is still within the bounds of normal consolidation.

That said, a few more weeks of poor performance and the consolidation will look much heavier than a normal flag-like pullback. As well, IYT is nearing its 40-week moving average.

iyt transportation sector etf price consolidation analysis weekly chart

$IYT Transportation Sector ETF “daily” Chart

The daily chart shows price trading under its 20/50 day moving averages (bearish). However, the 200-day moving average is rising and 3-4 percent below current prices (price compression). The decline has slowed a bit and seems to be more of a sideways churn over the past 5 weeks. Still nothing to get excited about.

A reversal higher in the coming days will be necessary for traders interested in this sector. Price has attempted to reverse higher unsuccessfully on multiple occasions over the past 3 months.

It will be interesting to see if IYT turns the corner higher… or topples over. The rubber meets the road here soon. I sense an inflection point.

iyt transportation sector etf 200 day moving average support chart

Twitter: @andrewnyquist

The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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