IYT and XTN have the potential to bounce back. When is a different matter. Road and rail revenue is rising and due to their lack of foreign revenue, many of the companies that line IYT and XTN are not vulnerable to a strong U.S. dollar. In fact, some market observers view these ETFs as ideal strong dollar plays, which could also correspond to upside when the Federal Reserve finally raises interest rates. [Transport ETFs Wait on Dollar Rally]
Still, investors need to be mindful of the potential for more near-term downside in transports before deciding to get involved with the group’s stocks and ETFs.
“But bifurcation is typically an ominous circumstance, and I would not rule out the sector taking another leg down this summer, especially with the what-me-worry attitude by many market players regarding the transports’ weakness this spring,” adds Chessnwine.
iShares Transportation Average ETF
