NEW YORK (TheStreet) -- Since July 30, I have been analyzing sectors and focusing on rotation strategies -- booking profits in overvalued sectors, buying stocks in undervalued sectors, and trading the neutral sectors. Today, I look at "buy and trade" strategies for industrials and transports.
My benchmark ETF, the Industrial Select Sector SPDR Fund (XLI) includes both industrial and transportation stocks. The top 16 components of this 60-stock index include five stocks in the Dow Jones Industrial Average and five in the Dow Jones Transportation Average. Since the Industrial ETF includes some transportation stocks, I will also consider the iShares Dow Jones Transportation Avg (IYT).
Source: Thomson ReutersThe daily chart of the XLI ($36.68), shown above, has an overbought-momentum (12x3x3 daily slow stochastic) reading, with XLI above its 21-day, 50-day and 200-day simple moving averages at $35.58, $35.07 and $35.39, respectively. XLI closed Friday up 10.9% from its June 4 low at $33.08. My semiannual value level lags at $27.72 with a weekly pivot at $36.42 and annual, monthly and quarterly risky levels at $37.74, $38.02 and $42.08, respectively. Source: Thomson Reuters The daily chart of the IYT ($90.34), shown above, has a rising-momentum (12x3x3 daily slow stochastic) reading, with IYT below its 21-day, 50-day and 200-day simple moving averages at $90.62, $90.94 and $91.14, respectively. IYT lagged the XLI with a close on Friday up 4.9% from its June 4 low at $86.09. My semiannual value levels lag at $80.77 and $74.80 with weekly, monthly and annual risky levels at $91.74, $95.99 and $97.22, respectively.
Reading the TableOV/UN Valued -- The stocks with a red number are undervalued by the percentage shown. Those with a black number are overvalued by that percentage, according to ValuEngine. VE Rating -- A 1-Engine rating is a strong sell, a 2-Engine rating is a sell, a 3-Engine rating is a hold, a 4-Engine rating is a buy and a 5-Engine rating is a strong buy.
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