Aerospace and Defense (ITA) The ITA has shown solid relative strength the last few weeks even when the broad market was having issues. The sector is up about 3% to start the month of October and looks poised to continue higher after closing back above its 21-week EMA the last two weeks. ITA had a strong start to 2021 running up from 90 to 110 before having a summertime pullback retracing about half the gains. Now has broken above its downtrend and momentum shifting higher with the RSI at 55 above the midline. Seasonally Aerospace has shown a positive bias in October and November the last 10 years. Up 7 of 10 years in October and 9 out of 10 years in November with a 5.5% average return. 

The ETF’s top 5 holdings are RTX, BA, LMT, TDG, NOC but the top two names RTX and BA make up about 40% of the index. The best-looking charts within the group include a few of the top names as RTX and NOC are hitting new highs. But BA and LMT are a few coming out of recent downtrends with potential to catch up. Looking to buy the strongest charts in this group or just buying the ETF for a position trade into November may be a way to play the bullish seasonality and trend continuation on the weekly chart.  

BA has seen a lot of bullish options flow since the start of October including today on 10/11 a large buyer of December $230 and $240 calls for more than $6M in premium combined.