Beware The Transport Triple Top (IYT)
If you're a fan of the Dow Theory, which states moves in the Dow Jones Transporation Average confirm similar trade in the Industrials, you'll want to take note of the fact that the iShares Dow Jones Transportation Average ETF (NYSE: IYT) has formed a triple top chart pattern.
A triple top usually indicates buyers have tried three times to push a security through a certain price level without success. Actually, the three tops in IYT are each lower than the last, another bearish sign.
IYT has struggled to surpass its November 2008 peak which lies around the $73-$74 area. Even news of Berkshire Hathaway's (NYSE: BRK.A, BRK.B) purchase of Burlington Northern Santa Fe (NYSE: BNI) couldn't push the transports to new highs.
Buyside volume has been waning and if the downtrend in the Transports persists, the index could see 3,600, dragging the Industrials down to 9,700 in the process.
Remember that after the double top was formed, IYT fell 12%, so IYT is definitely worth watching right now.
