TRAN Dow Transportation Index INDU Dow Industrials Weekly Charts Dow Theory Non-Confirmations

In 2010 into 2011 as the QE2 money pump drove markets higher, the green dots show higher highs in the Trannies confirmed by higher highs in the Dow Industrials, and visa versa, the upside rally was real and running strong.  In late April 2011, the Dow printed a rising wedge, negative divergence and overbot conditions, that created the expected spank down.  The trannies, however, ran higher into July 2011. The Dow had already rolled over, thus a Dow Theory non-confirmation occurs, and, the result was the waterfall crash in August 2011.  Chairman Bernanke then saved the markets with Operation Twist while the ECB's Draghi got into the money printing business as well with LTRO1 and 2 during late summer and Fall 2011.

The upside party started again due to the stimulus pump, and higher highs were printing once again. The blue square is where the trouble began.  Note how the Dow prints higher highs with exceeding the highs from a year earlier as well. The Trannies, however, peaked in February 2011 and has yet to see those highs again.  This created another non-confirmation since Trannies would not confirm the Dow rally.  Hence, markets rolled over and crumbled lower this year. Then, another stick save as usual, with the stimulus rumors starting early in the summer, and Draghi promising to do whatever it takes in July, the markets bounced again with the power of the printing press. The Dow continues along to print higher highs over the last few weeks, however, the Trannies continue moving lower. Looks like its time again for a roll over and the weak and bleak indicators for the Trannies do want lower lows, as well as the Dow indicators exhibiting negative divergence wanting to see price roll over.  Projection is lower prices moving 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.