The Dow transports-tracking ETF (IYT) has fallen more than 3 percent in the last month, and TradingAnalysis.com founder Todd Gordon says there are troubling signs that it could fall below a key level.
“We’re seeing some underperformance in the transports relative to the broader market as a result of the escalating tension with trade tariffs with China,” he said Tuesday on CNBC’s “Trading Nation.” “I’d like to take this opportunity to be short IYT.”
Dow Theorists often look to the transports as confirmation of the market’s general direction.
The trade: Gordon is suggesting buying the August monthly 185/180 put spread for about $1.38, or $138 per options spread.
Bottom line: Gordon sees IYT falling below $180 on Aug. 17 expiration.