IYT’s “ratio hit channel resistance at a year ago and decline almost as hard as it did during the financial crisis in 2009. The sharp 12-month decline took the ratio down to channel support at, where a small rally has taken place of late. This rally reflects that Transports, are reflecting some relative strength against the broad markets, for the first time in a year,” said Chris Kimble of Kimble Charting Solutions.
Market observers are optimistic about a cyclical recovery where U.S. consumers and businesses spend more, which would add to increased activity through railways and transportation sectors. Railroads are popular plays among some of the largest investors, including Bill Gates and Warren Buffett. [Sector ETF to Play Warren Buffett, Bill Gates’ Pick]
“Now this hard hit index is attempting to break above steep falling resistance at above. Transports have been the leader on the downside for the past 12-months. The Power of the Pattern believes that what the leader to the downside here does going forward, could be very important to the broad markets,” adds Kimble.
Dow Jones Transportation Average
Chart Courtesy: Kimble Charting Solutions