The D-J Transportation Average has been this market's shining light and leader. Only the Transports of the major stock averages has climbed to new record highs. Great! Then why does this chart bother me? For one thing, the Transports rose for 12 out of 14 days. For another thing, RSI shows that the Transport Average is heavily overbought, and MACD looks bearish. A third item that bothers me is that the Transports yesterday -- suddenly fell over 90 points on their own -- with no news. And maybe most importantly, the Transports have risen to new highs, unconfirmed by the Industrial Average. According to Dow Theory, a penetration by one average, unconfirmed by the other Average, is worthless for prediction purposes, and is more than likely to prove deceptive.
The Transport action seemed to rub off just a bit on its companion Average, the D-J Industrials. The Dow slipped 44 points. One ... Log in or subscribe to continue reading.
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