TRAN Transportation Index Trannies Daily Chart Overbot Negative Divergence H&S

The Trannies keep trying to print a closing high but is struggling for the last couple weeks. The Dow Industrials are making new highs so from a Dow Theory perspective, the bulls would like to see the 6020 taken out to the upside. The 6020 level is the top from three weeks ago. Last week price attempted twice to attain 6020, but failed. Today the Trannies were at 6020 and failed. The red lines show the rising wedge, overbot conditions and negative divergence that made the smack down an easy call. Now the price action is trickier. The indicators clearly show a lack of enthusiasm for any more upside. The weekly chart is the same but a continued stutter step move sideways-ish for a few days or week or so would not be unreasonable, then a roll over.

The blue H&S, with the action now serving as a right shoulder, is head at 6020, neckline at 5780, target at the strong support at 5540.  Obviously, the H&S pattern will be negated with a close above 6020.  Watch the 20-day MA at 5918 moving forward. Projection is a roll over coming in the days ahead and a move lower to 5780-5800 to test the H&S neckline. As a rule of thumb for today, the market bulls receive a feather in their caps if a close over 6020 is printed; the bears are happy if a close under 6020 occurs. 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.

Note Added 3/4/13 at 8:03 PM:  TRAN explodes higher in the afternoon closing at 6045 well above the 6020, blowing out to new highs as the Dow Industrials blow out to new highs. It is all going the bulls way.  The H&S is negated; the high today at 6045 can serve as a potential head for an H&S moving forward.  The close higher now creates negative divergence that will want to see price spanked back down as the days and a week or so plays out.