INDU Dow Jones Industrial Average and TRAN Dow Jones Transportation Average Daily Charts Dow Theory Divergence

Lots of strange things are occurring in the markets these days. Perhaps these oddities are a signal of sorts.  Lots of Dow Theory media hype occurs this year, but, not so much over the last month. The green dots clearly show the higher highs in price occurring with both the Trannies and the Dow so it was all systems go from the Dow Theory perspective, however, starting mid-March things are not so rosy.  The Dow continues to punch out new highs; the green dots show higher highs and a higher low so the upwards trend remains but the Trannies (red dots) show a downward trend now established with lower lows and lower highs. No one is talking about Dow Theory anymore. The divergence is clear.

The Fed's easy money and the money fleeing Europe is pumping the dividend stock bubble, blue chip bubble and consumer staples, healthcare and utilities bubbles as well. This behavior reinforces the move higher in the Dow. It appears the equity markets, especially perceived safe haven dividend stocks, are thought to be bullet-proof, and money is looking for a place to go creating this latest market phenomena. It is more likely for the Dow to roll over rather than the Trannies reverse a downtrend that is now in place. 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.