The oldest trading system is the venerable Dow Theory. Basically, it says that the Dow Industrials and the Dow Transportation averages must be in sync. In other words, both must make higher highs to be in a bull market.
But if one makes a new high and the other does not, that divergence is worrying.
That is the situation right now.
The Industrials just made new all time highs but the Trannies, as they are called, have not.
It doesn’t make sense because you need to transport the good that the Industrials are producing. So when one of the two indexes, in this case the Trannies, don’t follow, it is a sign that the economy is shakey and therefore the stock market is shakey.
This is another example of the foundation of the market crumbling.
Not enough for a crash or bear market but enough for a small setback.
Courtney Smith
Support@WealthBuilderLLC.com