Tight Trading Range For Transports

Includes: IYT
by: Bespoke Investment Group

The underperformance of the Transports over the last few months has been one of the more widely talked about issues with this market. What hasn't been mentioned much is just how sideways the Transports have traded. There has been a lot of back and forth action, but over the last six months, the spread between the highest and lowest points (on a closing basis) of the Dow Jones Transportation Index stands at just 8.31%!

(click images to enlarge)

As shown below, the six-month hi/lo spread of just 8.31% for the Transports is the lowest reading seen since 1965. When an index or stock trades in a sideways pattern for so long, it's ramping up for a big move in either direction. The longer it trades sideways, the more extreme the move will be. Let's hope the next move is to the upside for the Transports.