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DJ Transportation ETF IYT: At Major Technical Crossroads?
 August 24 2016 ( From TradingView )
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The Situation

​​We just start to realize how deep and quick the correction at the end of June
​was ​on Brexit fears on the ​​​​US equity market: ​From the pre-Brexit close made
​on June 23 2016 on the Dow Jones ​Transportation Average ETF IYT 
(iShares Transportation Average ETF) at 138.16, to post-Brexit close 2 trading
​sessions after on June 27 at 125.94, ​a drop of 9.5%, a level reached back in
​mid-February 2016.

Rebounding from those technical levels was quite a statement ​from Mr Market
​but few of us realize that the the post-Brexit panic was in fact an opportunity
for portfolio managers to rebalance at the end of month/quarter from cash
​and bonds to stocks. Also, the relative flight to quality and liquidity was in
​strong favor of US Equities​​.

​​But the Mighty Dow Jones Transportation Average Index ETF (IYT) is keeping the same message for awhile as it keep underperforming other Major Indices that puzzle me tremendously. 


Here is some Technical Observations:​​​
​​1) From the bottom price reached on June 27 for SPY ETF to the peak reached on August 1, it was up by +10.5%; IYT ETF  out performed with +15.5% from its previous low reached on June 27 to the previous peak 
made on July 14.
(See first chart below)

​​2)
On August 23, IYT ETF closed +1.7% below the 200 DMA (Day Moving Average) ​(See first chart below - Green line)​
but SPY ETF still +6.7% above its 200 DMA.

3) Historical Volatility (past 10 days) on SPY ETF is at 5.29, a lot lower than the IYT ETF at​​ 7.75.


​​​​​​​4) SPY ETF already broke its Major Resistance Trendline from 2015 on July 8; IYT ETF is only near testing its own Major Resistance Trendline that started back since November 9 2015.
(See first chart below - Blue Trendline - Ellipse)

5) ​​On August 16 2016, on a relative basis (the ratio of Dow Jones Transportation ETF IYT ​to the Mighty Dow Jones Industrials ETF DIA) we tested the Major Support Trendline that started back since January 14 2016 ​​(See second chart below - Grey Trendline)​ and failed to stay break. We keep making lower highs and lower lows on that ratio, nothing technically bullish there. We are now getting near the Major Resistance Trendline, the last call for Bulls on a relative basis.  ​​(See second chart below - Blue Trendline - Ellipse)​

​​6) ​​Almost the same battle with the Mighty SP500 Index on a relative basis. The ratio (Dow Jones Transportation ETF IYT ​to the Mighty SP500 Index ETF SPY) keep making lower highs and lower lows and is near testing the Minor Resistance Trendline. (See third chart below - Blue Trendline- Ellipse)​ .
Last time that ratio was into that low zone was back in June 2013. And looking at Monthly charts on those ratios is even more frightening. (See fourth and fifth charts below)

​As the ​​​​​Mighty DIA ETF got way over the previous peak reached on April 20 2016, the Dow Jones Transportation ETF IYT ​failed to reach yet the previous peak of April 2016; it is still into a lower highs and lower lows technical pattern, a completely different pattern than the SPY ETF and the DIA ETF.​​​

​​But most importantly, what puzzle me the most is that, that Big Divergence continue to prevail between Dow Jones Transportation the Dow Jones Industrials (See six chart below) and the Mighty SP500 Index. As the keep underperforming, it become a serious warning from the Dow Theory.

The Ultimate Battle for Bulls is to break soon the Major Resistance Trendline​​ to reverse trend as the DJ Transportation Average is the only Major Stock Market Index who did not break out yet technically speaking.

​(See first chart below - Blue Trendline - Ellipse)





​​




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Charles Dow
DJ Transportation ETF IYT: At Major Technical Crossroads?  $DJT, $SPY #investing #dowtheory #SP500 #dowjonestransport #stocks #transport

Dow Jones Transportation ​ETF IYT
​( Daily Candles )
​20 DMA ( Day Moving Average - Yellow Line )​
50 DMA ( Day Moving Average - Red Line )​​
200 DMA ( Day Moving Average - Green Line )​​

Financialiceberg.Com
Financialiceberg.Com
Daily RATIO ( Candles )
Dow Jones Transportation ​ETF IYT 
over​
​Dow Jones Industrials ​ETF DIA
20 DMA ( Day Moving Average - Yellow Line )​
50 DMA ( Day Moving Average - Red Line )​​
200 DMA ( Day Moving Average - Green Line )​​

Daily RATIO ( Candles )
Dow Jones Transportation ​ ETF IYT
over​
​SP500 Index ​ETF SPY
20 DMA ( Day Moving Average - Yellow Line )​
50 DMA ( Day Moving Average - Red Line )​​
200 DMA ( Day Moving Average - Green Line )​​

Financialiceberg.Com
Monthly RATIO ( Candles )
Dow Jones Transportation ​ETF IYT 
over​
​Dow Jones Industrials ​ETF DIA
Monthly RATIO ( Candles )
Dow Jones Transportation ​ ETF IYT
over​
​SP500 Index ​ETF SPY

Dow Jones Transportation ​ETF IYT ( Blue Line)
Dow Jones Industrials ETF DIA ​​( Daily Candles )

Financialiceberg.Com