Dow Theory

[kennynah]

if this market continues upwards, it wont be too long before everyone will be super confident and even exuberant from their superlative gains...and then, then it will be the fall...

i say, give it at least another month...

[winston]

Providing some ballast for the analyst's apprehension is the action in the Dow Jones Transportation index.

"While the excitement in some parts garners much of the media's attention, the Dow Jones Transports, a key cyclical index, and sometimes a leading indicator for the overall stock market, has quietly rolled over, putting in a lower high and lower low," Arbeter noted.

"In addition, while the DJIA has exceeded its 2011 high, the DJ Transports, at their recent closing high, was about 4% below its 2011 peak."

He continued: "This non-confirmation by the transports is a bit worrisome and cause for some caution.

We note that the divergence between the two indexes is not major from a price and time standpoint, so this is another reason that we only see a small pullback in the overall market."

Source: The Street

[winston]

Dow Transports Diverge From Industrials

Dow Theorists look for the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average to confirm each other.

That means that when one index makes a new high, the other should be making a new high as well. When there is divergence between the two, as there is now, it could signal a trend reversal for the market.

As shown below, the Dow Jones Industrial Average has been making new highs in recent weeks, while the Transports index has been struggling. The Transports index is having a tough time even holding onto its 50-day moving average, while the DJIA remains overbought.

Time will tell how this plays out, but rest assured that we'll be hearing more and more about this negative divergence in the coming days.

http://www.bespokeinvest.com/thinkbig/2 ... rials.html

[winston]

Market "sell signal" is flashing… Dow Jones Transportation Average sinks to a six-week low

[kennynah]

soon...soon. but i don't think it will be tomorrow

[winston]

On Fast Money, CNBC:-

Keith McCullough expressed concerns about the underperformance of the transports and housing.

Dennis Gartman also was leery of the transports and the impact of oil prices on airlines.


Source: The Street

[iam802]

Since mid-Feb, Dow Jones Transport ($TRAN) has not been confirming the bullish move.

It has move lower and 2 signals has been sighted since:

1. A bearish cross between Tenkan sen and Kijun sen

2. The leading kumo has twisted; suggesting that the trend has change.

[winston]

Transports, Small Caps Hit New Highs

For a month or so now, the bears have been arguing that the Dow Transports as well as smallcap stocks have been underperforming and therefore not confirming the new highs being made in the Dow Jones Industrial Average (DJIA) and the S&P 500.

Today, however, both the Dow Transportation Index and the Russell 2,000 (smallcaps) are back to their bull market highs.

The fact that these two sectors of the market have now cleared this hurdle should make the bulls happy.

http://www.bespokeinvest.com/thinkbig/2 ... highs.html

[winston]

S&P Capital IQ's Arbeter has argued for the past few weeks that stocks did endure a kind of stealth pullback in the past two months, and that's a contributing factor to his optimism now.

"Some of the earlier-in-the-year weakness can be plainly seen by looking at the price action of the DJ Transports, which fell 6% into its early March low," he wrote.

"Since that time, the transports have recovered and appear to be tracing out a bullish base.

To complete this bullish formation, we believe the index needs to break to new recovery highs above the 5,370 region."


Source: The Street

[winston]

Dow Transports Are Looking Beefy by JC Parets

The relative strength we’ve seen in the Dow Jones Transportation Average has been awfully impressive.

And not just recently, but actually going back to the year 2000.

While the Dow Jones Industrial Average is up less than 30% from those early 2000 lows, the Trannies are up over 120% during the same time period.

http://allstarcharts.com/dow-transports ... ing-beefy/