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Stock Market Support Near $14,358 On Transportation Index Suggests Rally Will Continue

Stock-Markets / Stock Market 2021 Apr 02, 2021 - 11:55 AM GMT

By: Chris_Vermeulen

Stock-Markets

An interesting Fibonacci Measured Move pattern has set up in the Transportation Index (TRAN) recently.  The Transportation Index is an important component of the future US economic expectations.  As the Transportation Index rises, one could assume greater economic activity is expected in the near-term 3 to 6+ future months.  As the Transportation Index declines, one could assume weaker economic activity is expected in the near-term 3 to 6+ future months.  My research team and I watch the TRAN as a type of confirming indicator for US major index and sector trends.  When we see the TRAN rising sharply, we can often assume various US sector trends will also move higher.

The Transportation Index Daily chart below shows two key elements we find interesting.  The first RED price range on this chart represents a 100% Fibonacci Measured Price move from the early November 2020 bottom to the mid-January 2021 peak.  If we extend that same range to the early February lows, we see a major support level exists near $14,358 (a full 100% Fibonacci Measured Price move).  The TRAN price has recently broken above this level and we believe this support level will likely hold and prompt another moderate rally attempt above $14,750.


Another Fibonacci 100% Measured Price move can be seen in the second RED box, originating at the start of February 2021 lows and peaking at near the late February highs.  We have drawn this Fibonacci Extension range on this chart showing the $14,669 level as the 100% Measured Move target.  The high price for today, at $14,669.02, reached this 100% Fibonacci Measured Price level and has begun to pull back a bit.  This is an expected type of price reaction to a 100% Measured Move event before a new price trend starts up again.

We believe the support near $14,358 will hold up well throughout this brief pullback in price after reaching the $14,669 level.  The recent rally in the Transportation Index, after the FOMC chatter, suggests the markets are still expecting a stronger global economic recovery attempt and that suggests the Transportation Index will likely attempt to move upward.

Watch for an upward breakout on the TRAN Daily chart above $14,700 and watch for new target levels near $15,000 & $15,625.  We need to let the markets work through a moderate price rotation after reaching this fully 100% Measured Move advancement and to initiate a new price trend.  It is very likely that once the TRAN breaks above $14,700, a new upside price trend in the US major indexes and strongest sectors will propel the US stock market higher by another 3.5% to 7.5% before reaching the next 100% Fibonacci Measured Price move levels.

If you are having trouble understanding how to find opportunities in various sectors and major market trends, then sign up now for my FREE webinar that teaches you how to find, enter, and profit from only those sectors that have the most strength and momentum. Don’t miss the opportunities in broad sector rotations over the next 6+ months.  Staying ahead of these sector trends is going to be key to developing continued success in these markets.  As some sectors fail, others will begin to trend higher.  Learn how BAN Trader Pro can help you spot the best trade setups.

For those who believe in the power of trading on relative strength, market cycles, and momentum but don’t have the time to do the research every day then my BAN Trader Pro newsletter service does all the work for you with daily market reports, research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my premium subscribers

Chris Vermeulen
www.TheTechnicalTraders.com

Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and is the author of the book: 7 Steps to Win With Logic

Through years of research, trading and helping individual traders around the world. He learned that many traders have great trading ideas, but they lack one thing, they struggle to execute trades in a systematic way for consistent results. Chris helps educate traders with a three-hour video course that can change your trading results for the better.

His mission is to help his clients boost their trading performance while reducing market exposure and portfolio volatility.

He is a regular speaker on HoweStreet.com, and the FinancialSurvivorNetwork radio shows. Chris was also featured on the cover of AmalgaTrader Magazine, and contributes articles to several leading financial hubs like MarketOracle.co.uk

Disclaimer: Nothing in this report should be construed as a solicitation to buy or sell any securities mentioned. Technical Traders Ltd., its owners and the author of this report are not registered broker-dealers or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. Never make an investment based solely on what you read in an online or printed report, including this report, especially if the investment involves a small, thinly-traded company that isn’t well known. Technical Traders Ltd. and the author of this report has been paid by Cardiff Energy Corp. In addition, the author owns shares of Cardiff Energy Corp. and would also benefit from volume and price appreciation of its stock. The information provided here within should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. Technical Traders Ltd. and the author of this report do not guarantee the accuracy, completeness, or usefulness of any content of this report, nor its fitness for any particular purpose. Lastly, the author does not guarantee that any of the companies mentioned in the reports will perform as expected, and any comparisons made to other companies may not be valid or come into effect.

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