Transports Respect Resistance and Stay In Their Channel

Last week’s price action wasn’t too much of a surprise, expecting some type of short-term rally in equities but not guessing for it to have much weight behind it and looking at the slope of the S&P 500 on Thursday giving us a bearish outlook. We closed out the week with some weakness on Friday but ended up just slightly positive.

I tweeted out a chart of Transports on Friday morning, wondering if the index would respect resistance or if we would see some type of breakout. As you can see below we still have a nice and neat channel in the Dow Jones Transportation Average, with a slightly downward bias of the channel lines.

Much has been discussed about the disconnect that’s occurred between the DJ Transports and DJ Industrial averages over the past several months, with transports not confirming recent advances we’ve seen in the major industrial index.  A breakout of this channel would likely instill some confidence back into equity enthusiasts that a rally is actually possible. But until then, confidence is getting hard to come by for the bulls.


Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+.

About Andrew Thrasher, CMT

Andrew Thrasher, CMT is a Portfolio Manager for Financial Enhancement Group, LLC, an asset management firm in Central Indiana and founder of Thrasher Analytics, an independent financial market research firm. He specializes in technical analysis as well as macro economic developments.