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 TECHNICALS
DJ Transportation: Critical Major Resistance?
 July 13 2016 ( From TradingView )
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The Situation

​We just start to realize how deep the correction near the end of the month
​of June was on the US Equity Market and all that a courtesy of Brexit Fears.
From the pre-Brexit close made on June 23 2016 at 7671.53 ​on the Dow Jones
Transportation (DJT)​, to post-Brexit close 2 trading sessions after on June 27
​at 7093.40, ​a drop of 7.5%, a level reached in mid-February 2016.
​​​
Rebounding from those technical levels was quite a statement ​from Mr Market
​but few of us realize that the the post-Brexit panic was in fact an opportunity
for portfolio managers to rebalance at the end of month/quarter from cash
​and bonds to stocks. Also,the relative flight to quality and liquidity was in
​strong favor of US Equities​​.

​​​
The Mighty Dow Jones Transportation Average Index (DJT) is at Technical Crossroads to say the least. Already, the SP500 Index is in Breakout mode since July 8.     ​(See First Chart Below - Ellipse)​

Here is some Technical Observations:​​​
​1) DJT underperformed with 3.3% below from its previous high reached on April 20 2016
​and SP500 is at 2.3%​​​​ above April 20 2016 high. 
(See second chart below)​

​​2) DJT from highest peak price (reached on November 28 2014) to the lowest price yet (reached on
​January 20 2016) was 31.2% and only 15.2% for the Mighty SP500. ​​​​(See second chart below)​

​​​​​​​3) DJT is now near the Fibonacci Retracement  zone of .50% at 7857 (From peak price on May 20 2015 to the Low price on January 20 2016).

​​​4) DJ​T is at the Major Daily Resistance Trendline that started back on March 20 2015. ​​​​
​(See first chart below - Blue Trendline)

 ​As the ​​​​​Mighty SP500 Index got over the previous peak reached on May 20 2015, the Dow Jones Transportation ​failed to reach yet a new high from April 20 2016; it is still into a lower highs and lower lows technical pattern, a completely different pattern than the Mighty SP500 Index. ​​​(See Second Chart)

​​But most importantly, what puzzle me the most is that, a Big Divergence continue to prevail between Dow Jones Transportation the Dow Jones Industrials and the Mighty SP500 Index. As the keep underperforming, it become a serious warning from the Dow Theory.

It becomes so Critical for Bulls to fight that Ultimate battle to break that Major Resistance Trendline for the Dow Jones Transportation especially after two false breakdown at the Support Trendline.
(See third Chart Below - Bottom Red Trendline)



​​




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Charles Dow
DJ Transportation: Critical Major Resistance?  $DJT, $SPY #investing #dowtheory #SP500 #dowjonestransport

SP500 Index ​
​( Daiy Candles )
​20 DMA ( Day Moving Average - Yellow Line )​
50 DMA ( Day Moving Average - Red Line )​​
200 DMA ( Day Moving Average - Green Line )​​

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Dow Jones Transportation ​
​( Daiy Candles )
​20 DMA ( Day Moving Average - Yellow Line )​
50 DMA ( Day Moving Average - Red Line )​​
200 DMA ( Day Moving Average - Green Line )​​

Dow Jones Transportation ​
​( Daiy Candles )
​20 DMA ( Day Moving Average - Yellow Line )​
50 DMA ( Day Moving Average - Red Line )​​
200 DMA ( Day Moving Average - Green Line )​​