In my estimation, if IYT:DIA begins to strengthen from here, we will see new intra-year highs for the S&P 500 and Dow Industrials. On the other hand, if IYT:DIA served up additional weakness in transports, global recession fears would likely trump recent psychological feel-goods like 1400 on the S&P 500 and 13000 on the Dow.
A sign of greater relative strength in IYT would likely indicate additional broader market gains to come, whereas more relative weakness in IYT would likely precede broader market selloffs.
It follows that, in spite of tepid volatility and low volume, investors may be sitting atop a pivotal point for the direction of the Dow.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.
Gary Gordon reads:
On Twitter, Gary Gordon follows: Jonathan Hoenig
Hard Assets Investor