On Tuesday, the transportation sector (IYT) widened its spread on earnings from one of its top holdings, United Parcel Service (UPS).
By beating earnings per share estimates by 6.5%, UPS was able to bring IYT back to both its 200-day moving average and 50 DMA.
IYT has now confirmed a bullish phase shift at Wednesday’s close on the 50-DMA.
However, while commodity circulation shows that economic demand is holding up, the retail space continues to stumble in its current trading range.
If we focus on how these two sectors interact with each other, we can look for a correlation between the increase in demand in IYT and the fact that retail companies are starting to follow in the footsteps of the IYT as consumers order more items, thereby increasing the movement of goods.
That said, what are the key areas to watch for each symbol to hold if it supports this idea?
Looking at the two charts above, first we can observe that the IYT maintains its bullish phase shift on the 50-DMA at $267.32.
However, if IYT pulls back to digest its big move higher, it should ultimately hold the 200-DMA at $262.
On the other hand, Retail Space (XRT) is stuck between the resistance at $83.29 and the support at $75.62.
Analysis and summary of ETF trading:
S&P 500 (SPY) 461.45 to erase.
Russell 2000 (IWM) 203.55 to erase.
Dow Jones Industrials (DIA) Watching for a second close above the 50-DMA at 355.29
Nasdaq (QQQ) Held the 200-DMA at 366.19
KRE (Regional banks) 72.27 pivot area.
SMH (Semiconductors) 287.73 resistance.
IYT (Transportation) Confirmed a bullish phase shift.
IBB (Biotechnology) Watch for 10-DMA hold at 129.37
XRT (retail) 83.54 resistance.