Is the iShares Transportation ETF emitting a warning signal?

As GameStop’s share price continues to defy all logic, Mish Schneider warns traders to consider the wider economic picture.

Jan. 29, 2021

This article was originally published on Opto – Understand What Really Moves Markets. 

The GameStop saga continues, as the amateur traders who frequent a popular Reddit page known as Wall Street Bets have pushed GME through another round of all-time highs.

Their influence, and the constant stream of messaging on social media, has even reached Elon Musk, who posted a tweet late Tuesday saying “Gamestonk!!”

While the social hype has increased the some share prices, including BlackBerry [BB], Nokia [NOK], Koss Corp [KOSS], the general market went through a rough Wednesday with all the major indices closing negative.

Even more alarming is the market’s warning signal in the form of the transportation sector breaking its 50-day moving average (50-DMA).

This merits extra caution, as iShares Transportation Average ETF [IYT] is key a supporter of the market’s demand side.

Other key sectors to following in breaking their 50DMA could confirm that transportation’s break of the major moving average holds more value.

That is why, along with IYT, we watch the iShares Russell 2000 ETF [IWM], SDPR S&P Retail ETF [XRT], SDPR S&P Regional Banking ETF [KRE], iShares Nasdaq Biotechnology ETF [IBB] and VanEck Vectors Semiconductor ETF [SMH].

Together, these sectors make up the “Economic Modern Family”, and they guide us into the best performing areas, while also alerting us to potential problems.

Currently, only IYT has broken its 50-DMA at $222.64.

Its next support area falls on $214.50, which is the low of the first trading day this year.

Furthermore, while the other members of the family are sitting above their 50-DMAs, the Semiconductor ETF has its 50-DMA nearby at $218.95.

Monitoring the situation through these major moving averages and key sectors is one way to monitor the health of overall support.

This article was originally published on MarketGuage. With over 100 years of combined market experience, MarketGauge’s experts provide strategic information to help you achieve your investing goals.

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