One year ago this month, the Transports/S&P 500 ratio peaked and has since been heading lower, showing that the transports have been diverging against the broad market. Below looks at the S&P 500's performance relative to IYT.
The chart above shows that IYT under-performed the S&P 500 by nearly 10% over the past year, with a good deal of under-performance happening over the last few weeks.
Below looks at the pattern of IYT over the past few years-
IYT is testing rising support, which could be a support test of a bearish rising wedge pattern. At this time, the trend is up, despite the year-long divergence.
What IYT does at (1) could send an important message to this key sector. Historically, this sector sends an important message to the broad market.
Bottom Line
What IYT does at (1) could send an important intermediate message to the sector and the broad market.