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Transports Continue to Drive Broader Markets Higher

David Becker
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www.iforex.com
Transports Continue to Drive Broader Markets Higher

The Transport as reflected by the DJ US Airline Index ($DJUSAR) hit new highs this month and remain one of the strongest groups in the stock market. The IYT (ishares ETF) is within a steady uptrend during the last eight months. The October trend line and late April high combine to mark support in the 135 area. The indicator window shows the price relative (IYT:SPY ratio) hitting a new high this month as the Transports iShares outperforms the overall market. The RSI continues to move higher on the IYT reflecting accelerating positive momentum while printing near 67, which is on the upper end of the neutral range.

Specific airlines are also breaking out. Delta (NYSE:DAL) , and Southwest (NYSE:LUV) are the strongest airlines because they recorded new highs this month. American (NASDAQ:AAL) is trading near its early March high and close to a new high. Jetblue is breaking out with a surge from early September to late November. The stock then embarked on a long consolidation and broke support with high volume in late April. This support break did not hold as the stock surged back above 8.5 with even better volume.

chart-transports-continue-drive-broader-markets-higher.png

United Continental (NYSE:UAL) is a laggard, but the stock is finding support near the 50% retracement line and the December consolidation. As with Jetblue, the long-term trend on this chart is up. Using this assumption, the decline is considered a correction the long-term uptrend to resume at some point. UAL fell sharply with a move below 40 in late April and then firmed. Most of the May price action has been above 40 as the stock consolidates. A break above the consolidation highs would be positive and provide the first indication that the bigger uptrend is resuming.

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