Why Transports Could be a Huge Winner
The iShares Dow Jones Transport Average ETF for my Trade of the Week.
Keep in mind that I am also forecasting a mild correction to occur within the next few weeks, so any opening trade should be taken with some caution. Also, the IYT ETF has exhibited more than a fair amount of volatility during the past year, moving from a low in March of 2009, where it traded all the way down to less than $40.00 to its current level near $80.00. I believe this ETF has room to run even higher if the market does not correct too severely or, hopefully, not correct at all.
One more word of caution: The “Expected Move” of 7.64% (my estimate of the relative volatility of a stock on a week-to-week basis) is at the upper end of how much loss many investors can stomach. This means IYT could move lower by $6.05 and still be in an up trend. The higher the EM (Expected Move), the higher the risk of losing money on the trade in a correction. Keep this in mind before jumping in.
- My technical score for IYT is a very respectable 163 out of a maximum of 200, which rates the fund a “Strong Buy.”
- Even though the fund has doubled in a little over a year, it would not surprise me to see it move much higher. This could be a good trade if it can weather a correction without stopping out.
- The average daily volume has been increasing on increasing share price for almost three months. This could be a good sign for upward momentum in share price.
- Both the industry focus (transportation) and global focus (United States) market segments are in bull mode. This is indicative of increasing demand by investors to own equities in these two groupings.
P.S. Don’t miss out on the 22nd annual MoneyShow Las Vegas, May 10-13 2010 at Caesars Palace. This event will be your one-stop resource for the most comprehensive education, efficient research, and valuable advice you need to make smart investment decisions in 2010 and beyond. Attend and hear myself and other leading experts reveal where they see growth opportunities in stocks, bonds, ETFs, commodities, and options; and which markets overseas they see outperforming in the near term. Visit The MoneyShow Las Vegas website to register FREE online, or call 800/970-4355 and mention priority code 018170 today!