Transports Worry Me Up Here
- Posted by JC Parets
- on July 23rd, 2013
I think now is probably a good time to bring up the Dow Jones Transportation Average running up into its May highs. These fresh closing highs in trannies got all the Dow Theorists pumped up last week as they finally confirmed the new highs that the Industrials had already been making. But what you don’t hear much these days is the big underperformance for Transports lately. The relative strength the group had been showing this year peaked all the way back in March, believe it or not.
But why am I really worried up here? Well, it just bothers me when new highs are made that can’t hold for more than a day or two, especially when they’re all-time highs, as was the case in Transports. Here is the daily bar chart showing what just happened:
Notice the bearish divergence that has been developing throughout the year as prices have rallied; the relative strength index has not confirmed. But more problamatic might be the weekly chart. Look at the same higher highs, but more bearish divergences in RSI:
Failed breakouts scare the heck out of me as it is. But when they come along with bearish divergences on multiple timeframes, forget it. We’ll need to see new highs in price very soon to invalidate any of these bearish developments.
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.blog comments powered by Disqus
J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He earned the Chartered Market Technician designation (CMT) in 2008 and now actively manages money incorporating Technical Analysis and Behavioral Finance into his practice More
- S&P500 Seasonal Studies Combined
- I Like It Best When The Patterns Don’t Work
- Stocktoberfest 2014 October 26-28 Coronado
- The Relative Strength in Belgium and Switzerland Stands Out
- Video: Looking For Investing Opportunities Around the World
- Why America is the Best in the World?
- Webinar: Technical Analysis To Find Profitable Opportunities Around the World
- Was That A Failed Breakout in the US Dollar?
- Radio: Larry Kofsky & JC Parets from NYSE
- This Chart Still Suggests Buying Bonds and Selling Stocks
Archive by Year