Trannies Ready to Show Their Stuff

The Transportation stocks are lining up on multiple timeframes to make a new leg higher it would appear. As market participants we know that a strong economy and by extension, a strong stock market should see shippers and carriers performing well. 

If Train and Freight companies are delivering products in high quantity, it means companies that sell those products are seeing high demand from consumers spending discretionary income. All combine to suggest a strong underlying demand for goods and services we need or want for our daily lives.  

It is my view that the Transport stocks are on the cusp of extending their rally significantly in the near future.  

Monthly

The long-term view of IYT has the look of an orderly consolidation after strong 2016 and 2017 rallies. Price extended up to the 161.8% Fibonacci level of the 2015 bear market decline and has since moved sideways to let the 20 Month SMA catch up to price.

Should we see a resumption of trend above the $200 level, the next extension area sits near $250+.

Weekly

The Weekly chart shows price holding firm in a range just above a multi-month resistance area. This is setting up a 3x Weekly High breakout potential should we see price move through the $198 level.

A breakout here brings the prior highs into play quickly

Daily

The Daily chart zooms in on the 4-month trading range. Note the gap resistance from late-February right near $198. This resistance has contained prices the entire time, but the behavior of the near-term action is changing.

There have been multiple tests of the higher end of the range. Those rally attempts were all rejected sharply and prices moved back to the support lows. Since the end of May sellers have not been able to reject prices as they did previously, this to me shows a strength.

It appears the sellers are wearing out and an upside resolution is imminent.   

A couple names we hold in our Model Portfolios at zentrendstrading.com are UNP and ODFL.

Note that these leading names in the Transport group have already broken through their resistance and retested the area as support. Prices are now responding higher off of that retest.

UNP

ODFL

We must always remember that a Sector or Index is not an entity on its own, but rather a group of individual underlying stocks. If these stocks are breaking out and leading the group higher, the odds increase that the Sector or Index will follow closely behind.

If you have interest in learning how to identify and manage this kind of multi-timeframe investing, please visit us as zentrendstrading.com.

We provide detailed Notes, Videos, and ongoing dialogue for our positions allowing members to follow along with our trades. Our process is designed to take advantage of large swings that occur in the market without having to sit in front of your computer all day long. 

For questions or comments please contact me at cody@zentrendstrading.com or on Stocktwits/Twitter @ZenTrends