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Update: When Does the Market Break Down?

There are a lot of ol' timers out there who have their programs set for "not going against the DOW Theory". That means, if the Dow Transports and the Dow Industrials fail to the downside, sell programs will kick in.

The Dow Theory says that the Dow Jones Transports and Industrials must be in sync with each other. For that reason, we will look at the Dow Transportation Index today in order to see what it is doing.

The chart is below and when you look at it you can see that it has been in a trading range since last October.

Currently, the DJT is still inside its trading range and holding. It has been trying to consolidate but it is has been in the bottom half of the trading range.

Note the red resistance line since April 23rd. ... the DJT has been in a down trend since then and it needs to break above the red resistance line.

So, make a effort to keep an eye on the Dow Transportation Index.

Dow Jones Transportaion Index Chart

 

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