IYT / Transports Update

I've had several emails about this one, I have an open put position, but considering the overall position and tone, I wish I had made that a straight equity IYT short and thought more toward the longer term.

In any case, here's what we have, I think IYT can be had at better prices, you may need to set some alerts, you can of course jump to the sub-industry components of DJ-20 (Transports) and look through those for more specific trade options, I may be able to look through those 20 if we get a little slow down here.

 This daily chart of IYT would not be a major head fake or failed breakout, but it would be one nonetheless, typically I expect more volatility on these moves, but recently the volatility has been lower as have been the moves. Last night I reviewed some historical tops and the head fake moves in those were not very large, but then again the use of Technical Analysis against retail traders has only increased if anything over the last several years.

At the yellow rectangle, (the one Technical Indicator I still trust is Candle Sticks), we have a near perfect reversal formation right at the area of the head fake or failed breakout, it's nearly text book with a large bodied breakout candle from an ascending triangle as Technical traders would expect and since I already had the trendlines drawn in, I'm almost certain the last IYT update would have warned to look for a head fake move out of the ascending triangle. As a matter of fact I did a quick search and the last update on July 19th IYT / DJ-20 (Transports) Short said this...

"This is the triangle I mentioned, bullish ascending triangle, traders would be waiting to go long on a breakout which is why I was waiting on the breakout, but information was already in place that probabilities were sky high it would be a head fake/bull trap."

Obviously there were some updates just prior to this as that is what I was quoting from.

 

 There's the volume that a head fake move is good for among other things, if you still haven't read, "Understanding the Head Fake Move" articles linked on the member's site, you are missing a key market concept that will not only give you a new understanding of the market, but how to use that to your advantage,

The 60 min IYT as well as DJ-20 which looks almost EXACTLY the same, are negative here, even worse on shorter timeframes.

This is all I'm concerned with right now, an opportunity on the 2 min chart, a small positive divergence. This could give us either an add to position or for those who are interested, a new short position at an excellent price point and lower risk.

Here's the DJ-20 (just because I already had the trendlines drawn in on StockFinder for the ascending triangle breakout, the 5 min chart clearly shows the distribution, therefore the head fake or false breakout (one in the same) which we already expected as you saw from a previous post based on the charts that were in place at the ascending triangle.

If interested, I'd set some upside alerts, I will too and we'll take a look for a good timing/entry area.