Monday, February 13, 2017

TRAN Dow Transports Daily Chart; Trannies on Verge of All-Time High and Dow Theory Confirmation, Or Not

The major indexes print new all-time record highs including the SPX (S&P 500), INDU or DJI (Dow Jones Industrials), COMPQ (Nasdaq Composite), NDX (Nasdaq 100), RUT (Russell 2000) and NYA (NTSE Composite). However, the trannies do not. TRAN prints a high at 9499.18 and needs 9502.50 to take out the current all-time high from 1/26/17.

The new record highs in the Dow Jones Transports are key since it will confirm the new highs in the Dow Industrials from a Dow Theory perspective and forecast more upside for stocks ahead. So keep an eye on it. Can TRAN print a new all-time high? it is only a hair away.

The red lines show negative divergence in play for the last two highs in price. It does not appear that price has the oomph to move higher. Trannies are impacted by oil prices and rise today on lower oil prices. Lower oil may provide the upside the transports need.

Note the selling volume in late January far greater than the upside buying volume with the three white crows, or three white soldiers, candlestick pattern. Usually the three white soldiers will form after a downtrend to identify higher stock prices ahead. The three white candlesticks occur in late January after prices have already rallied strong since early November. TRAN has come back up to the prior high so the three white soldiers did supply enough strength to bring price up for a test of a triple top.

Many traders will tell you that there is no such thing as a triple top. In other words price will break out higher when it comes up for the third peak, like trannies show above. However, Keystone has found over the years that it is 50/50, flip a coin, sometimes the triple top holds, other times it does not.

The key is the all-time high at 9502.50. Algorithms will likely trigger buy programs if it is tagged. TRAN is at 9451.66 as this message is typed moving in the wrong directions trending lower as the session continues. Market bulls are joyous, throwing confetti, singing songs and drinking Fed wine and Trump champagne but they know in their heart of hearts they need TRAN above 9205.50 to prove that the upside in the stock market has lots of legs. 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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