{"id":120242,"date":"2025-08-05T06:59:12","date_gmt":"2025-08-05T06:59:12","guid":{"rendered":"https:\/\/www.europesays.com\/us\/120242\/"},"modified":"2025-08-05T06:59:12","modified_gmt":"2025-08-05T06:59:12","slug":"transportation-sector-is-the-market-only-as-strong-as-its-weakest-link","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/120242\/","title":{"rendered":"Transportation Sector: Is the Market Only as Strong as its Weakest Link?"},"content":{"rendered":"

The rally to start the week is quite promising, as once again, Friday\u2019s selloff was an overreaction to headlines.<\/p>\n

Yet, for the sake of consistency, the July 6-month calendar range high remains elusive to the strongest sector, Semiconductors . <\/p>\n

However, both and s cleared that indicator\u2019s high.<\/p>\n

That leaves the market still divided between strong indices versus weaker economic modern family members.<\/p>\n

Were the warnings we saw last week a mere blip in the sea of relentless retail buyers\u2019 stock index portfolios? \"IYT-Daily<\/p>\n

What we wrote earlier:<\/p>\n

\n

Looking at IYT, Transportation<\/p>\n

The picture is different.<\/p>\n

Transportation, a huge component of the US economy, shows not only stagflation potential, but also recession potential.<\/p>\n

IYT never cleared the July 6-month calendar range high.<\/p>\n

The momentum went into a bearish divergence before the price broke down under the July calendar range low AND both the 50- and 200-day moving averages.<\/p>\n<\/blockquote>\n

I concluded the article with this:<\/p>\n

\n

Always look at the weakest link and the strongest link to gauge whether dip buying is the right thing to do or not.<\/p>\n

We see IYT says be patient, the worst could yet be around the corner. <\/p>\n<\/blockquote>\n

While the rest of the Family<\/strong> says maybe Friday was the end of the selloff, should we be concerned about the\u00a0Transportation (NYSE:) sector?<\/p>\n

The updated chart shows today\u2019s bounce, which could look like a mean reversion when you add the Leadership indicator.<\/p>\n

Note that the blue line that measures performance against the benchmark cleared the Bollinger band. That is a performance mean reversion.<\/p>\n

On Real Motion, we see momentum improving but the red dots remain below both the 50 and 200 daily moving averages.<\/p>\n

Should momentum continue to grow, that would be a good sign.<\/p>\n

Nonetheless, a better sign would be if the price action can clear not only the moving averages, but also the July 6-month calendar range low (red horizontal line).<\/p>\n

Hence, while today was a good day to select the stronger stocks to buy on a dip, the jury is still out on whether the market found a firm footing last week.<\/p>\n

Here is the difference between those who trade with YOLO and those who have a strategy: they part ways.<\/p>\n

Should IYT roll over, I would continue to think more actively about equities one buys and more defensively on the existing positions. <\/p>\n

Plus, I would not forget to watch the long bonds TLT for signs of risk off or on.<\/p>\n

ETF Summary<\/strong>\u202f<\/p>\n

(Pivotal means short-term bullish above that level and bearish below)<\/strong>\u202f<\/p>\n