The iShares Dow Jones Transport Average ETF (NYSE: IYT) is flashing a big time buy signal in my propretiary systems. As such, I am selecting this ETF for my Trade of the Week.
Keep in mind that I am also forecasting a mild correction to occur within the next few weeks, so any opening trade should be taken with some caution. Also, the IYT ETF has exhibited more than a fair amount of volatility during the past year, moving from a low in March of 2009, where it traded all the way down to less than $40.00 to its current level near $80.00. I believe this ETF has room to run even higher if the market does not correct too severely or, hopefully, not correct at all.
One more word of caution: The "Expected Move" of 7.64% (my estimate of the relative volatility of a stock on a week-to-week basis) is at the upper end of how much loss many investors can stomach. This means IYT could move lower by $6.05 and still be in an up trend. The higher the EM (Expected Move), the higher the risk of losing money on the trade in a correction. Keep this in mind before jumping in.
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