Over the weekend, an unexpected price chart caught my eye…
I’m talking about the iShares U.S. Aerospace & Defense ETF (ITA).
According to iShares.com, ITA provides investors exposure to U.S. companies that manufacture commercial and military aircraft and other defense equipment.
Among the ETF’s top holdings are stocks like Raytheon (RTX), Lockheed Martin Corp (LMT), and Boeing (BA)…
(If you’d like more information on this ETF, here is a link to the iShares website.)
It caught my eye because it looks like ITA is gearing up for a bullish run to test its previous all-time highs of 119.90.
But first, let’s look at the price chart to see the setup I’m talking about…
There are two key features I’ve highlighted on this price chart:
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This is the prior all-time high at 119.90 from February 2020 (horizontal red line).
This price level is my expected upside target on this technical setup.
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The second feature are the three moving averages – the 20, 50, and 200-period moving averages (MA – blue, red, and green squiggly lines).
And now, they’re completing one of my favorite technical patterns that I call moving average compression.
This kind of compression occurs when prices trade sideways for an extended time. Then, all the moving averages will clump together and go flat. That’s what’s happened since the start of 2022.
But what’s more exciting is what the pattern tells us about what’s next…
Let me explain further…
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I love this pattern because it almost always results in a big move.
When the moving averages compress, it’s like the market becomes a coiled spring… ready to explode and release all that energy immediately.
And it looks like that moment has finally arrived…
You can see how prices have recently shot higher and started to distance themselves from the moving averages.
The momentum that’s built up over the last few months of sideways trading should be enough to get the ETF back to its all-time high.
And I’m going to keep a close eye on it.
Happy Trading,
Imre Gams
Analyst, Market Minute
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Hello Jeff, it was by sheer luck that I opened the referral email from “Breakthrough Investor” with your interview on the One Stock Retirement. I’m retired with only a small amount of money to invest, but I do have time to spend (life can be boring, as you said, in retirement).
There’s so much advice… my inbox is overloaded with comments and more than I can process. Your approach is so refreshing, sensible, intelligent, and practical for the average person like me who doesn’t wish to become a fulltime investor but realizes that sitting on the sidelines doesn’t make sense either. And playing it safe really won’t get me anywhere before I die.
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