iShares Dow Jones Transport ETF (IYT)

Transports confirm the Dow, because if goods are being produced, they have to be shipped somewhere. We’ve had a good run, but the market expected a bit of a correction from August, and this has gone down recently. Doesn’t think that is terminal. Chart shows a big rounded base for 2015-2016 with pretty positive action in 2017. Unless it breaks the lower band of around $160-$164, this is quite constructive and quite positive.

(A Top Pick Nov 7/16. Up 11%.) The key to this is that seasonality is positive, particularly from usually October until January of each year. If you currently own this, continue to Hold, as you could get another possible seasonal trade coming into May.

Seasonally, transportation has done very well from about the middle of October right through until the 1^st week in January. This just broke to a new high today, and completed a reverse head and shoulders pattern. On a fundamental basis, lower energy costs are going to help the companies going forward.

This includes all the US railroads as well as the airlines. This has just entered into a period of seasonal strength which continues right through until May of each year. Of greater importance, the transportation sector has started to show signs of outperformance in the last couple of weeks. Has started to outperform the market which is really important at this time of the year. It could get back to the $151 level during this period of seasonal strength.

Thinks the sector is going to do extremely well. Oil should eventually go higher and this would impact transportation stocks. He probably likes the ETF better than the individual stocks. He likes it until oil turns to the upside.

Dow transportation index. Fedex, UPS and railroads. Does not like the trade unless you trade day to day.

(A Top Pick Oct 1/14. Up 12.62%.) Seasonality for transports is normally from mid-October right through until around the end of November. It then takes a bit of a break and then, right around the end of January, it clicks and goes up until April. Technically it is underperforming the market.

(A Top Pick Sept 15/14. Up 7.44%.) (These 3 were a “Buy on Weakness of the market” plays.) Seasonal tendency surrounding transportation is that they tend to run up into the US Thanksgiving holiday and peak around this time. You want to be taking your profits now.

Don’t buy today. The DOW transportation average broke below the 50 day moving average today. Seasonally, the sector bottoms around the middle of October and has a strong move until January. Technicals are positive even before its period of seasonal strength.

The 3 Top Picks are “Buy on Weakness” plays. This tracks transportation in the US. If it becomes oversold in the next few weeks, that would be an opportunity to Buy. Seasonal strength for transportation stocks tends to run from beginning of October through to the beginning of December.

You want to be with the relative out performers and the transports have been. There has been a correction, but there has been with everything in the past week or so. Transports are still doing well. Nothing is broken on the chart. There is no topping action.

Is it better to use equal weight ETFs or full weight ETFs for seasonal investing? There are 3 different types of weightings. Price Weighting, which would be an ETF where the biggest position would be the largest stock price. Cap Weight, which is market price times shareholders. Or Equal Weight. Believes this one is a Price Weight. He is not crazy about price weighted indexes or ETFs because the company with the largest share price pretty much drives the bus. The equal weight SPDR Transport (XTN-N) always outperforms the price weight