Don here...
Blake Young just identified a crack forming inside the industrial sector that most traders are completely overlooking. Global shipping and logistics stocks are collapsing while the S&P 500 sits in a double top formation.
Expeditors International and CH Robinson Worldwide both erased six months of gains on volume that dwarfs everything we've seen all year. That kind of selling doesn't happen in a vacuum.
The S&P 500 is testing a triple top. A close below 6,083 opens the door to 6,078 and then 6,069. Utilities and consumer staples are the only sectors holding green on the day.
Blake has been pounding the table on both of those sectors for weeks. They continue to outperform while everything else bleeds red.
The transport ETF (IYT) rallied into its upper target and reversed all the way through in a single shot, hitting $78.66. Blake sees bearish pressure holding below $80, with downside targets at $78.93 and $76.56.
FedEx is sitting flat at $367. Eleven cents of movement on a day when its smaller peers are getting destroyed. Blake doesn't think that calm lasts.
Here is what Blake laid out in tonight's video:
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FedEx 375/380 call spread selling for $1.45 at a 42 delta, with Blake requiring at least $1.25 on the fill given the wide spreads in the options chain
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FedEx 350 put calendar for roughly $3.50, offering a potential 200% return if the stock drifts toward that target by March expiration
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UPS 125 put with an in-out spread structure on a $10 wide for just over half the cost, targeting a near 100% return below $115
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Boeing setting up for a buy signal above $242, with a $254 upside target representing roughly 5% from current levels
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RTX breaking out toward $202 with $210 on the table, a move Blake expects could happen within two to three days
The logic behind the bearish transport trades is straightforward. When the smaller players inside a sector collapse on record volume, the bigger names tend to follow. Blake is positioning for that contagion to reach FedEx and UPS while using aerospace and defense names as the long side of the rotation.
Click here to watch Blake break down each trade setup and the transport sector divergence
To your success,
Don Kaufman
Chief Market Strategist, TheoTRADE
P.S. TheoTRADE turned 10. Celebrate by doubling your credit. $1,000 becomes $2,000. First 100 only. Don't be 101 →
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