Sunday, July 31, 2016
INDU (Dow Industrials) and TRAN (Dow Transports) Weekly Charts Dow Theory Non-Confirmation
The Dow Theory non-confirmation continues. For a strong bullish stock market, the industrials are making new highs and this is confirmed by the trannies, and/or visa versa. Higher highs and higher lows in price will confirm that all is fine for bulls. Into early 2015 all was fine but in April-May 2015 the Dow Industrials made a new high but the Dow Transports did not confirm. The trannies made a lower high and started a downtrend. Stocks sold off.
The downtrend was in play with lower lows and lower highs until this year. In April, the industrials are up joyously, pumped by central banker easy money. And stocks continue higher. The industrials make a higher low and then over the last two weeks another higher high. The upside is so bright you have to wear shades. But not so fast since the trannies are a fly in the ointment. TRAN could only make a lower high in April.
TRAN languishes sideways unable to confirm the joy in the Dow Industrials, therefore, the big upside rally in equities remains in question. The market bulls need to push TRAN above the purple line at 8300 to signal sustainable upside in play. The longer that the trannies can not get up to 8300, the higher likelihood that stocks will roll over to the downside. The Dow under 17350 taking out the prior low would signal trouble ahead for stocks. 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.