Transports (XTN) currently hold a special place in our memory because they were the first bearish signal ahead of the October 2018 correction that we are still experiencing today.
XTN just formed a Bearish Island Reversal on the chart today:
We had a gap up on November 7, 2018, that sucked FOMO traders in. The island formed the shape of a slow fade lower until today’s wicked gap down.
With consumption in the U.S. slowing down from rising interest rates, transports will be a good early indicator.
Jim Cramer said on CNBC today that, “If the Fed moves in December, you’ll wish you sold at these prices.”
Seems counter-intuitive that transports would be selling off when truck demand is soaring as more and more consumers are switching to Amazon and online shopping, especially going into the holiday season.
The important indicator to watch over the coming days is the Chaikin Money Flow (CMF) on XTN. If the CMF goes negative over the coming days and weeks, that will be a major sell signal.