The Dow Jones Transports are getting a lot of attention here, and rightly so. They are trading pretty heavy and have been a key ingredient to this incredible ride higher.
After reaching 52 week highs late last year, the Transports have traded sideways to lower for 6 months. This looks like it could be a topping pattern. Careful here.
To be honest, I’m not even sure what comprises the Dow Jones Transportation Average (TRAN). But I really don’t care. As many of you know, I’m a chartist. I like working with numbers and geometry. And it’s clear that the Dow Jones Transports parabolic run may be nearing an end.
Turning back the clock to September Of 2014, the geometry of the price action said that the Dow Jones Transportation Average was running out of steam (pardon the pun). See the chart below. Then page down for some calculations the said the Transports were nearing a top.
Dow Jones Transports – Parabolic Run Almost Over?
There are, however, some things we can learn from this from a PATTERN perspective. Here’s some of my work dating back to September 2014, when we hit some major targets. But as you can see, the Transports needed a pattern target adjustment when they blew threw the initial AB=CD target.
- My “job” as a PATTERN chartist is to do my best to find patterns that make for great risk/reward setups. As a PATTERN chartist you are NEVER wrong. The PATTERN works or it doesn’t it… it has NOTHING to do with you personally. If I like something, I take action and use a stop. Simple. On longer term time frames, the patterns are “easier” to construct. An all time low to a “former” all time high gives you amazing projection capabilities. In fact, it is one of our easiest PATTERNS to form – the “zig zag or AB=CD” PATTERN. Folks this formed on the Transports and got smoked… not even a token of resistance. This said the pattern had gone parabolic.
- when a “zig-zag” or “AB=CD” PATTERN fails it will usually go to 1.27 or 1.618 of the PATTERN. See new “D” on the chart below.
- So, what do we have “now”?
- Note the all time low of 13.43 was on July 05, 1932 a mere 30,024 days ago.
- Using that low and a 1.27 AB=CD we get a target of 9149.
- Note the all time low of 13.43 was on July 05, 1932 a mere 30,024 days ago.
Dow Jones Transports – Parabolic move blew threw initial AB=CD target
And with targets in tow and the Transports trading sideways to lower over the past 6 months, investors need to be careful here. This leader looks heavy.
Follow Bart on Twitter: @BartsCharts
No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
