The Dow Jones Transportation Average can be a great market “tell” for investors. Especially when it’s outperforming or underperforming the broader market.
Dow Theory comes to mind… this is where the Dow Industrials and Dow Transports confirm a trend by following one another in making new highs or lows. And when they don’t… it’s concerning.
Recently, the Transports have been underperforming… and even prior to today’s collapse, the Transports were heading lower, while the Industrials and Tech stocks were hovering near highs.
This was indeed a market “tell”.
Looking at the chart below, you can see that the Transports have broken through key price support. This should put investors on guard. Whether the stock market is setting up for a 5 percent pullback or a 15 percent correction, investors need the Transports to firm up.
In short, the transports are a key part of the economy and when they fail to follow the trend, I take note. Â The recent price action on the Transports (and broader market) is telling investors to expect more volatility.
Dow Jones Transportation Index Chart
Note that KimbleCharting is offering a 30 day Free trial to See It Market readers. Just send me an email to services@kimblechartingsolutions.com for details to get set up.
Twitter:Â Â @KimbleCharting
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.
