The iShares IYT Transportation Average ETF (IYT) doesn’t get much attention, but that may change soon. This morning, it’s breaking out of a multimonth bullish pattern. That’s notable because — according to Dow Theory — we want the transportation average to confirm any major move or breakout in the Dow Jones Industrial Average. The logic is straightforward: If companies that make the goods are thriving, the companies that transport those goods should be busy as well. Strong activity in transportation is a classic sign of a healthy economy, which in turn supports continued strength in industrial companies. Of course, the structure of the economy has evolved dramatically over the past century since this market principle first became popular. But the underlying idea remains useful: The more areas of the market participating in a move to the upside, the more healthy and sustainable that move tends to be. We’re going to look at a few charts today, but the big takeaway is that persistent breakouts from patterns across multiple timeframes are unusual — and when they appear, they deserve our attention. The first one is the daily chart, where IYT has been knocking on the door of a breakout above the 73-level ever since it first revisited that area in July. Despite several failed attempts, IYT continued to hold close to the highs. That persistence has been a constructive sign. Then came the broad market snapback in late November, which helped fuel today’s breakout through that zone, as indicated on the chart. This breakout now triggers a measured-move target up into the 80-zone, which would be meaningfully above its 2025 high and even above the all-time high from 2024, shown on the next chart. This weekly chart stretches all the way back to late 2022. When look at the entire decline from late 2024 through the April crash lows and then the recovery over the past several months, the entire structure can be categorized as a massive bullish inverse head-and-shoulders pattern. While the theoretical measured-move target from a pattern of this size would be much higher, this isn’t about making outlandish projections. The key point is that additional follow-through from here wouldn’t just confirm the larger pattern breakout — it could also put IYT into new all-time-high territory, which at this point isn’t far away. The real question then becomes: If and when that happens, how much more upside can we reasonably expect? We can start to answer that by looking at this 20-year, monthly chart. We can categorize this entire period as a series of four major bullish patterns. The previous three all resolved decisively to the upside, each followed by months — often years — of additional upside follow-through. Those breakouts occurred in 2012, 2017 and 2020 and, in every case, the eventual consolidation only served to create another bullish structure. The latest iteration has taken shape since mid-2021, meaning we’re essentially looking at a four-year bullish formation that IYT may now be breaking out of. Given both the length and height of this pattern, one could reasonably argue that not only is a new all-time high achievable, but that IYT could extend much further and for much longer if the long-term behavior of the past two decades repeats. Looking more specifically at IYTs 49 holdings, we see that ground transportation and air freight & logistics groups making up roughly 80% of the ETF. While many of the underlying names are already at — or approaching — new all-time highs, there is one highly recognizable laggard that deserves our attention going forward: UPS . UPS is the third-largest holding in IYT, with a weight of nearly 8%. And although it’s rallying today, the bigger picture is hard to ignore: UPS has been in a waterfall decline ever since topping in early 2022. It has now fully retraced the entire rally off the COVID lows. This is a weekly chart along with its 40-week moving average, which closely aligns with the 200-day moving average. Despite multiple attempts to reclaim that line, every effort has failed, and this has become even more evident throughout 2024. Of course, each failed bounce carried the potential to evolve into a bullish pattern — but that has not yet materialized. If, however, at some point soon UPS can, in fact, break out of a bullish formation and regain and hold above the 40-week line, then IYT would gain another major component contributing to its upside momentum. This is why UPS should be watched closely in the weeks to months ahead. DISCLOSURES: None. 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