Monday, June 24, 2013

TRAN Transportation Index Weekly and Daily Charts C&H H&S Patterns

A strong economy is reflected by a strong Transportation Index since the rails are moving coal and goods, FedEx and UPS are delivering packages and trucking companies are so busy that they need more drivers. However, Trannies tumbled -3.2% last week which is an ominous sign. Adding another couple percent today is over -5% lower in less than six trading days. The weekly charts shows the textbook Cup and Handle (C&H) pattern with base of cup at 4200 and breakout line at 5400. The handle is elongated but price broke above 5400 at the start of the year and ran to the target at 6600 (5400+1200). The weekly chart is sick with all the indicators weak and bleak (red lines). The brown lines show a Head and Shoulders (H&S) pattern in play. The daily chart takes a closer look at the H&S.  Head at 6500-ish, neck line at 5900-ish targets the 5300-5400 area which was the break out area for the C&H.

The daily chart indicators are mixed with a weak and bleak RSI and MACD line but the stochastics and money flow are more agreeable to a bounce. Nonetheless, any bounce should lead to lower prices due to the negative weekly chart. Trannies topped in May at the Chairman Bernanke time frame of 5/22/13 when tapering was first mentioned.  From a Dow Theory perspective, the Dow was punching out intraday highs but the Trannies turned south. TRAN is now printing lower lows and lower highs establishing a downward-sloping channel. As time plays out a test of the 5900 neck line would be prudent where price will either bounce or die. The weekly chart hints at lower prices as the weeks move forward. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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