From 1821 until 1846, the Santa Fe Trail was a two-way international commercial highway used by both Mexican and American traders.
Then, in 1846, the Mexican American War began, and a few months later, America’s Army of the West followed the Santa Fe Trail westward to successfully invade New Mexico.
After the U.S. acquisition of the Southwest ended the war, the trail helped open the region to U.S. economic development and settlement.
That trail played a vital role in the expansion of the U.S. into the lands it had acquired.
Travelers faced many hardships along the Santa Fe Trail.
Today, the trail to new highs for the S&P 500 NYSEARCA: SPY and NASDAQ 100 NASDAQ: QQQ was crossed.
However, that is far from the case for the Russell 2000 NYSEARCA: IWM and and the Dow Transportation Sector NYSEARCA: IYT.
IWM and IYT seem to be on the trail that’s smacked with dangers.
Perhaps it’s a lack of food or water.
Perhaps it’s the weather, or the rattlesnakes.
Or maybe they face strong enemies.
Regardless, although both have made significant progress in a week’s time, both still have quite the journey ahead to new highs.
In Transportation IYT on September 13th, 2018 the high was 209.43.
Then, the week of December 07th 2018, IYT had a high of 199.09.
From there, the sector crashed down to 155.24.
Since then, IYT rallied back to 200.42 the week of April 26th2019. But that was not a new all-time high.
Today, with new highs in SPY and QQQ’s, IYT’s intraday high was 196.79.
For this rally to continue, we must first see the high of the week of April 26th (200.42) taken out.
Now, comparing IYT to SPY, while SPY peaked in 2018 around the same time IYT did, it made a new all-time high the first week in May 2019.
IYT did not.
Then, SPY did it again in July and now once again today at 303.85.
IYT has not.
Should bulls be concerned?
Yes.
Unless IYT blasts off from here while SPY consolidates, this rally in tech and Fortune 500 companies remains artificial.
In other words, SPY, QQQ and SMH do not reflect what IYT suggests-the demand side of the economy is not that happy.
Sure, the Santa Fe Trail opened trade and the westward expansion.
However, horse travel was replaced by the much more efficient freight travel.
With inferior U.S. transportation infrastructure coupled with the inferior demand of goods and services, at what point does our transportation underperformance cause all-time high bull travelers’ hardships?
S&P 500 (SPY) 300 is price support. 303.85 is all-time highs to take out.
Russell 2000 (IWM) 156 is price support to hold and 158 is resistance.
Dow Jones Industrials (DIA) 270 is pivotal price support, 265.50 is next support.
Nasdaq (QQQ) New all-time highs at 197.83. 195.55 is price support.
KRE (Regional Banks) 53.00 is price support and 55.00 is pivotal resistance.
SMH (Semiconductors) 127 is price support and new all-time highs is at 129.12
IYT (Transportation) 195 is pivotal.
IBB (Biotechnology) 105 is pivotal, with 108 acting as price resistance.
XRT (Retail) 44 is a must hold.
Twitter: @marketminute
The author may have a position in the 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.
