The Industrial Average (see chart below) rose to a new record high on April 11, but the Transports (see chart) failed by a wide margin to confirm. This is what I was waiting to see. Then Monday, the market was hit hard with the Industrials and Transports both falling in triple digits. I took the non-confirmation seriously, but (see chart below) I also noted that the percentage of NYSE issues which are trading above their 50-day moving averages fell to 46.25% -- below the critical 50% mark. Thus, we not only have a serious Dow Theory non-confirmation, but over half the stocks on the NYSE have fallen below their 50-day moving averages. Conclusion -- the stock market may have topped out for the duration.
The Transports below look terrible. I'd be amazed, after this break, if the Transports can rally to a new high. And if they can't, all that can happen ... Log in or subscribe to continue reading.
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