Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money

66% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

  • Columnists

Mish Schneider Is transportation heading in the right direction?

The transportation sector has had a turbulent 2020, and early optimism this year has all but vanished already. Mish Schneider explains what the most recent signs could mean.

The transportation sector (see the iShares Transportation Average ETF [IYT]) has entered back into a bullish phase.

A bullish phase is when the price is over the 50-day moving average (50-DMA), and the 50-DMA is over the 200-DMA.

 

 

IYT is now back in line with the rest of its economic family members who, as whole, give a clear way to see market direction.

Here is a quick rundown of where the other Family members sit.

Grandad Russell 2000 [IWM] made all-time highs.

Granny Retail [XRT] is now consolidating after going through some wild swings created by stocks like GameStop [GME] and other popular Reddit picks.

Prodigal Son Regional Banks [KRE] is sitting at monthly highs with resistance to clear at $59.86.

Big Brother Biotech [IBB] made new all-time highs.

Sister Semiconductors [SMH] sits in the middle with highs at $246 and support at $223.72.

Each member was specifically chosen to show a different but essential piece of the market. But, knowing what to watch is 10 times more useful when paired with a basic guiding tool.

That is where the simple moving averages come in.

Right now is a perfect bullish situation with all the family members sitting above their 50-DMAs. Even though IYT triggered a warning when it broke its 50-DMA, it soon recovered.

The main point is to watch if members are moving together or breaking off into their own direction based on their price relative to their moving averages.

This is not only useful for key sectors, but also useful when viewing specific stocks. You can easily see strength or weakness by what phase a security is in.

Circling back to the transportation sector and its recent turn back to bullish, this becomes a focal point for whether or not this rally sustains.

IYT, simply put, must hold its 50-DMA or bullish phase to keep the market strong.

This article was originally published on MarketGauge. With over 100 years of combined market experience, MarketGauge's experts provide strategic information to help you achieve your investing goals.

Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

Continue reading for FREE

  • Includes free newsletter updates, unsubscribe anytime. Privacy policy

MarketGauge

Free ebook

Tricks of the trade: 7 interviews with the world’s top traders

Get it now

Related articles