Trade Set-Up (Longer Term) IYT / Transports

I'm not going to cover too many charts for IYT/Transports as I already did on June 9th which happened to be the near term top that was just put in place, Transports / IYT Are Looking Horrib and Transports / IYT . There are a few concepts here, such as the second post on the 9th that deals with "seemingly" bullish upside Rate of Change in price, however as I point out (often), these ROC's often lead to trend reversals or transitions between stages, the basic concept is "Changes in character lead to changes in trend", which is EXACTLY what you'll see in the Transports / IYT post and subsequent price action.

On the 9th I said I thought IYT made for an interesting position right there and then, especially given the daily candle and the increased volume that day. Last night in the Daily Wrap  I had said,

"6/9 was the absolute top, but if you are still interested, I think we'll get a second chance after today's high volume candle."

The other concept is that of volume, often Technical Traders see a day like yesterday in IYT, breaking support on heavy volume...

 And... assume that the heavy volume is a sign that the next day and near term trend will be down. However, often the heavy volume indicates a short term capitulation event, just like the 4 Dominant Price / Volume Relationships we track for all of the averages, "Price Down/Volume Up", while being bearish, most often leads to a close higher the next day as it is a short term selling climax.

Thus last night I thought there was a good chance we get another opportunity for those who didn't already take it and might want to, to get IYT short and I love the way Transports move, especially given the Iraq/Oil situation.

 This is a weekly Heiken-Ashi (form of candlestick) chart. I'm not going to go over the differences between candlesticks and Heiken Ashi candlesticks right now, but suffice it to say that this 5-day chart close up shows the candles walking the upper Bollinger Band (strong momentum) and as the green bodies get larger, price is more bullish. Unlike traditional candlesticks where a long upper wick is a bearish sign that higher prices were rejected, with Heiken Ashi candles, this is actually a bullish feature.

The red "Star" candle in the yellow box is treated the same as normal candlesticks, this is a loss of momentum and a reversal signal set up and just as important, IT'S ON LARGE VOLUME!

 ON A NORMAL DAILY CANDLESTICK CHART, THE PERIOD IN THE YELLOW BOX IS A REVERSAL SET UP AS WELL, SOME OF THE BEST CONFIRMATION COMES WHEN YOUR LONGER TERM (5-DAY) AND REGULAR 91-DAY) CHARTS BOTH CONFIRM THE SAME THING (A REVERSAL). 

You can see the 9th was the top, it was also the day I posted both of the alerts/updates for transports. Today we have price trying to break above near term resistance which was support until it was broken yesterday.

I'm setting multiple price alerts to look at IYT at each and see if the 3C charts are confirming a SHORT entry (intraday only as the longer term charts are already there as per the link/analysis above from 6/9).

The levels I'm placing alerts at include: $144.35 (resistance), the first area at $145.50-146.10, the second area from 146.70 to $147 and the last area which is where I'd guess price would go on a shakeout above the trendline, 4147.50-$147.90.