Industrial and Transportation Stocks Starting a Cycle Up
The industrial and transportation stocks have been beaten down, showing extremes in their respective cycles. With each group starting a cycle up, we are analyzing prospective candidates for short-term day trades and longer term swing positions.
Industrial Stocks – Cycle Up
The financial media has spent a lot of time pointing out the prospects for stocks from this group. As a result, BA, MMM, CAT, DE and many other components of the XLI turned this week.
Transportation Stocks – Cycle Up
Transportation stocks and the components of IYT are turning the corner, highlighting potential swing candidates as many rebound from extreme oversold conditions. The 50ma is the first target overhead.
FedEx and United Parcel both dropped in the recent selloff.
FDX has already started a move back to mean. Each time RSI reached oversold and reversed, price action gave fresh bullish positions a 3-month ride back to higher levels. Last week price reversed on Friday. The first target is the 50ma.
FedEx IV Rank is presently borderline at 51%. If you take a long call position, you’ll pay a higher premium. That said, buy as much time as you can afford if you choose options instead of common.
UPS sold to more extreme levels and might benefit from a quick retracement or mean reversion. Its IV Rank is presently 71%.
Remember Monday is a holiday, so more theta burn should be considered when purchasing options.
S&P Futures are fading from the pre-market highs, with SPY printing 273.00 blocks Thursday after hours. This level at the daily 50ma should hold as support going into the long weekend.
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Happy Fry-Day,
Vinny
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