The Transportation Sector ETF (IYT) closed .36% lower Tuesday. It was the only member of our Economic ETFs to end the day red.
On the other hand, the Retail Sector ETF (XRT) ended almost a half percent higher.
Because of how retail stocks and transportation stocks are interconnected via supply and demand, watching them can at times give off early warning signals for more fundamental economic issues.
With that said, all our closely watched ETFs including IYT, XRT, the Russell 2000 (IWM), Regional Banks (KRE), Biotech Sector (IBB), and Semiconductors (SMH) are sitting in a bullish phase. This means that the price is above the 50-day moving average and the 50-day moving average is above the 200-day moving average.
Furthermore, to create a warning either IYT or XRT would need to break their 50-day moving average for 2 consecutive days.
With so much happening including Wednesday’s inauguration and talk of another stimulus package close to 2 trillion dollars, the road to recovery could stay bullish.
As Keith wrote in his weekly outlook, the market has some mixed signals. The Dow, sitting on the 10-day moving average, has negative momentum.
Transportation IYT and Junk Bonds ETF (JNK) do as well. The Volatility ETF (VXX) has positive momentum.
That means we have 4 different divergences to look at. 3 where the price has not confirmed the negative divergence and one where the price has not confirmed the positive divergence.
With a bit more patience, we will soon learn whether the momentum is flash in the diverging pan, or a sign that something bigger is coming.
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S&P 500 (SPY) 381.49 resistance. Closed over the 10-DMA at 377.53
Russell 2000 (IWM) 215 high to clear.
Dow (DIA) Flirting with the 10-DMA at 309.26
Nasdaq (QQQ) 310 support. Resistance 319.39
KRE (Regional Banks) Needs to clear and hold over 59.38. Support 55.90
SMH (Semiconductors) 232 new support area.
IYT (Transportation) 226.96 the 10-DMA
IBB (Biotechnology) New highs.
XRT (Retail) Support at 70 the 10-DMA.
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.
