By Nicholas Santiago on July 2nd, 2010 10:57am Eastern Time
Since June 21st the markets have struggled, dropping about 10 percent. The prior week the markets rallied into options expiration week. This was not a surprise as the institutional money will rarely let the small retail options trader collect into expiration. Just think how many people, mainly small retail traders bought puts on the market in early June. In any case these markets are now on very shaky ground. Many traders and investors are pricing in Armageddon at this time; regardless if this should occur, the transport index holds some important clues. Today the transports are trading lower by 44.00 points even as the major indexes are basically flat. Many traders and investors are waiting to see if the transports will take out and close below the June 8th pivot low. Some traders and investors have already stated that a Dow Theory Sell signal has already triggered. However, the transports never closed below the June 8th pivot low at 3983. Should the market close below this point it would likely create a new flood of bearish investors.
This morning FedEx Corp (NYSE:FDX) is trading lower by 0.46 to $71.55. FedEx Corp is a leading global air and ground shipping company. This stock bounced off the important $70.00 support level. Should FedEx Corp break this level the stock could find support around the $66.00 area.
Norfolk Southern Corp (NYSE:NSC) is a leading railroad stock that is trading lower by 0.81 to $51.90. The stock will have some minor daily support soon around the $51.50 area. Should that level fail to hold then the $50.00 level will be the next support area.
Delta Airlines Inc (NYSE:DAL) is trading lower by 0.27 to $11.45. The stock actually has minor support at the current price. Should the stock decline the $11.00 is a very important support level. Should that level fail to hold it could trigger a bearish 'head and shoulders' top pattern. This level must be watched extremely closely.
Right now the transport sector is very important to follow. Many traders and investors will use the transport sector as a lead dance partner. Remember, when the transport sector declines it is a sign of contraction in the economy. If the transport sector bounces or trades higher the market will and should live to fight another day in a very weak economy.
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