September 7, 2016
By Mish Schneider
Today, the Transportation ETF IYT, the Trannie of our Modern Family took center stage as the star and reason to stay the long course.
With 100% of IYT’s holdings in the U.S. and 44% focused in ground freight and logistics, the above photo shot in Montana, exemplifies a part of the US economy we should never forget about-the part that moves stuff around.
So besides that I will never personally attend a Trophy Deer Tour, I do appreciate the process of moving whatever it is that floats your boat via freight onto trucks.
Another 25.22% of IYT is made up of Air Freight and Courier Services. Furthermore, 19.99% is comprised of Airlines. What made today particularly shine for Trannies was the move up in United Continental and American Airlines.
If the market is confident that goods, services and people plan to transport more, it stands to reason that IYT can make a vast difference to the GDP. That will help, but help what exactly?
Several members of the Modern Family have been relatively sluggish. Retail (Trannies mother) has floundered about underperforming the market by a huge factor. However, watch XRT now carefully. After a morning in the doldrums, right on cue, Granny woke up closing very near an area I consider if it crosses, a significant breakout point.
Biotechnology had a Golden Cross which means the 50 is now trading above the 200 daily moving average. For the first time since 2015, every sector in the Modern Family is in a bullish phase.
Time to party, right? After all, Retail, Regional Banks, Transportation, Biotechnology and of course Sister Semiconductors (who has been on her own Trophy Tour) look a lot better. And Granddaddy Russell 2000 keeps on trucking.
So, pretend we are flies on the wall at the Federal Reserve. They want inflation at 2%. Numbers for that have grown although not at the target yet. They want full employment-close. They want a stronger GDP.
They want a stronger GDP? Let’s do the math. Trannies + Retail = biggest part of the GDP. GDP increases or is projected to increase in the third quarter. Fed probably lets September go by without a change. But then what?
Oh flies on the wall, that’s so one month from now.
S&P 500 (SPY) Has to clear all-time high 219.60 to keep going
Russell 2000 (IWM) 125.86 July 24, 2015 high before the crash
Dow (DIA) Inside day. Lagging the others but not too concerning
Nasdaq (QQQ) Highest monthly close ever-109.13. Now 108 pivotal
XLF (Financials) 24.37 the 10 DMA support. Like the hold of the 10 DMA
KRE (Regional Banks) No confirm on that reversal so probably ready for more rally with 43 next hurdle
SMH (Semiconductors) 65.30 underlying support
IYT (Transportation) 146.07 the 2016 high
IBB (Biotechnology) 281 good risk point with a move over 290 better
XRT (Retail) Better if clears 45.
IYR (Real Estate) Confirmed bullish phase
ITB (US Home Construction) If clears 30 should continue
GLD (Gold Trust) Inside day. Now, 127.60 the 50 DMA support to hold
SLV (Silver) 18.62 the 50 DMA to hold above
GDX (Gold Miners) Inside day
USO (US Oil Fund) 11.20 the weekly MA to clear-until then noise
TLT (iShares 20+ Year Treasuries) 138-141 range to break
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