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ITY / SPY Ratio

It is a well-known fact that late in a business cycle, one may start to see important divergences between different sectors of the stock market. More specifically, it is not unusual to see the Transport sector start to underperform the broader market in anticipation of a slowing overall economy.

So it is that we must point out the recent breakdown of the IYT (iShares Transportation Index ETF) versus the broader SPY (SPDR S&P 500 ETF). The Ratio of IYT/ SPY chart shown below has arguably made a huge “Head & Shoulders” topping formation on a monthly basis going back to Q4 2014, and recently broke the neckline of that formation.

The IYT ETF itself looks poised to move towards one of the two Fibonacci fractal targets depicted below.

Internal to the top holdings of the IYT, the rails have to date held up well, but shippers such as Fedex and UPS have been the biggest index component drags -- perhaps as Amazon tries to in-source delivery methodologies increasingly over time. It will be interesting to watch what may cause the IYT to continue to underperform the broader market going forward as both of the charts above clearly imply.

Published By: Barclay Leib, Senior Advisor, Cooper Family Office

This narrative and its contents represent the views solely of the writer and not the Cooper Family Office, its entities, related entities, members, independent advisors and any other affiliates. It cannot and does not contain professional advice or guidance of any type and should not be used this for any purpose other than discussion. In no event are we responsible, without limitation, for any loss or damage whatsoever from any actions taken as a result of the information contained herein. The Cooper Family and the Cooper Family Office, its entities, related entities, members, independent advisors and any other affiliates have made no effort to ensure the accuracy, validity, reliability or correctness of anything stated in this document or on the Cooper Family website. The Cooper Family and the Cooper Family Office, its entities and assigns reserve all rights to protect the privacy of this document. Possession, distribution, publishing, disclosure, copying, reprinting, paraphrasing or quoting of all or any part of this proprietary document by others is strictly prohibited. The Cooper Family and the Cooper Family Office, its entities, consultants and assigns do not accept liability for any errors, omissions or adverse consequences from the content of this message for any reason. This is not an offer to sell any investment, product, fund, company, advisory or any other service and it should be noted that nothing produced, issued or disseminated by us or any related party, member, consultant or entity is a suggestion to take any action or actions whatsoever. The above references an opinion and is solely to share thoughts and opinions among our team and investment managers. It is not intended to be investment advice.

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