Of course, there's also the savings advantage of often bypassing the sales tax on big ticket items like TVs. Now, a post-crash weary consumer is purchasing basic household items like bed linens and small home furnishings to avoid the expense of $4.00+/gal gasoline to go to Target or Walmart. A smarter consumer can now go "shopping" at their computer screen and compare prices, read reviews and and have their purchases delivered to their doorstep as quickly as the next day. FedEx and UPS are the backbone of "New Retail".
Even with the cream-of-the-crop transports in the top three holdings comprising almost 30% of this index, IYF has had a sharp decline over the past month.
From the October lows, IYT has generally kept pace with the Dow Jones Industrial Average. As the Dow has drifted higher, IYT has created a disconcerting negative divergence. From a technical standpoint, IYT has developed an ascending wedge, considered to be a bearish pattern. Breaking the lower trend line with high volume selling confirmed a breakdown in the transports.
Currently, the 50 day moving average appears to be holding as support. The Money Flow Index and Stochastics look to have bottomed and turned. However, this is not confirmed by the slower Relative Strength Index and MACD. The +/- Directional Index shows the bears are clearly in control. Should the 50 day moving average support fail, the 200 day moving average doesn't show much of a support level and we could see price dropping to the longer term price support at $85.00.
A buy at $85.00 on IYT could be profitable if we see real economic recovery. But more than a buy/sell recommendation, IYT can give us some insight into the general health of the economy and the overall market, especially the Dow Jones Industrial Average. Watch IYT for the truth of economic recovery.
Disclosure: At the time I writing, I have no position in IYT.
Follow my intraday market commentary and various other observances on Facebook and Twitter
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV