Always consider hidden risks
DJ Transport: Too Little Too Late ?
July 8 ( From TradingView )
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The SituationThe US equity market was showing some strenght since mid-October 2014. Transports are
performing very strongly since then and was a sign for that; it did confirm the last upleg of the
stock market. But the Transport are weakening tremendously since its peak done on
November 28 2014.
ONE chart below is worth a look where we will show the the Dow Jones
Transportation Index ( Chart below )...We must observe carefully the DJ Transport Index as it is the basic factor
within the Dow Theory...
On March 30, the 20 DMA (Day Moving Average - Yellow Line - Chart Below) on the
DJ Transport closed below the 50 DMA (Red Line - Chart Below) , a first weak
On April 29, the DJ Transport closed below the 200 DMA (Green Line - Chart Below - Ellipse ), a critical technical sign indeed.
On a Relative Basis compare to the SP500 Index, the DJ Transport Index underperformed tremendously to reach levels not seen since February 2014!
But the real worry is that we are broke on June 29 the multiple lows in the DJ Transport: First on May 29 2015 at 8265.67, the second on June 9 2015 at 8256.62 and the third on June 17 2015 at 8252.67.
( See Red Trendline - Chart Below )
That Broken Falling Wedge Pattern on June 26 will trigger the next big move in DJ Transport.
Even with the huge rally on July 7, we failed to reached that Resistance Trendline form that Falling Wedge.
Too Little Too Late they say... ( See Red Trendlines - Ellipse - Chart Below )
Dow Jones Transport ( Daily Candles )
20 DMA ( Yellow Line )
50 DMA ( Red Line )
200 DMA ( Green Line )
Let s start with the Dow theory :
..."In Dow's time, the US was a growing industrial power. The US had population centers but factories were scattered throughout the country. Factories had to ship their goods to market, usually by rail. To Dow, a bull market in industrials (INDU) could not occur unless
the railway average rallied as well (TRAN), usually first. According to this logic, if manufacturers' profits are rising, it follows that they
are producing more. If they produce more, then they have to ship more goods to consumers. Hence, if an investor is looking for signs
of health in manufacturers, he or she should look at the performance of the companies that ship the output of them to market, the railroads. The two averages should be moving in the same direction. When the performance of the averages diverge, it is a warning
that change is in the air."..
DJ Transport: Too Little Too Late ? $DJT, $SPY #investing #dow theory #SP500 #dowjonestransport