October 17, 2019
By Mish Schneider
Earnings on many of the biggest names in that sector are happening now and throughout next week.
For example, J.B. Hunt and United Airlines reported already.
Both stocks have jumped in price and are now digesting those gains.
CSX Corp reported too.
That stock also jumped in price but remains under the 200 daily moving average and resistance.
That makes me wonder about trucks, planes and cheap oil.
One of the largest US trucking companies KNX or Knight-Swift Transportation is expecting weaker earnings, reporting that overcapacity of big rigs is to blame.
Nevertheless, that might be priced in as that chart also looks decent.
Which brings me to the ETF IYT-or a reliable ETF for the transportation sector.
Why should bulls focus on this sector into earnings season?
FedEx, IYT’s third largest holding will not report until December. Under the most pressure of the aforementioned companies, FDX is in a bearish phase.
The daily chart on FDX shows the price climbing with the recent rally, but still under the 50-DMA.
On the weekly chart, FDX is also in a bearish phase and rather far from its 50-WMA.
On the left, IYT shows the strength this week has given it. The phase, accumulation, is positive and reflects optimism.
On the weekly chart, IYT has cleared the 50-WMA entering into a bullish phase.
The biggest weighted stock in IYT is Norfolk Southern Corp NSC, which reports on 10/23 before the open.
NSC, like FDX only a bit stronger, trades slightly below its 200-DMA.
IYT now has support at 185-critical support.
The resistance level is 195-100.
If you compare this chart with the SPY one, it tells a completely different story.
Even with the move this week, considering the all-time high was hit in 2018 at 209 and change, the performance is more like a steam train running low on coal as opposed to the Fortune 500 stocks that have run high on cheap money.
SPY is near all-time highs. IYT has $10 or over 3 ATRs to go.
That is the disparity that worries me.
Will IYT catch up, or can it if SPY keeps running?
Will IYT fizzle, reflecting a weaker US economy?
As Johnny Cash sang,
I bet there's rich folks eatin'
In a fancy dinin' car
They're probably drinkin' coffee
And smokin' big cigars
Well, I know I had it comin'
I know I can't be free
But those people keep a-movin'
And that's what tortures me
Russell 2000 (IWM) 152.25 the 200153.35 last week’s high must clear/hold
Dow (DIA) 270 now must hold
Nasdaq (QQQ) 193.30 pivotal support. 194.71 closest resistance
KRE (Regional Banks) 52.80 pivotal support if this is to hold
SMH (Semiconductors) Digesting which is fine. Needs to hold 121.00
IYT (Transportation) 185-190 range to clear
IBB (Biotechnology) 102.50 important pivotal support. 105 resistance
XRT (Retail) 43-44 huge resistance. 41.50 support
Every day you'll be prepared to trade with: