Life with Trannies is Always Exciting

Many people in my circles could not imagine life without Trannies. It is part of their upbringing and just normal. But I understand that Trannies can be an after thought in today’s world. What with the large number of other Indexes around now, the S&P 500, NASDAQ, Russell 2000, the Transportation Index can get lost in the mix. You are still with me right? You knew I meant the Dow Jones Transportation Average ($DJT, $IYT) of course. This Index has been a cornerstone of Technical Analysis in the US Markets forever. As part of Dow Theory, the Transports need to confirm a new high in the Industrials ($DJIA, $DIA) for a new trend to be bought. This has been a sticking point keeping many Technical Analysts out of the market as the $DJIA has been making new highs, without confirmation. But the monthly chart for the Transports below does not show any sign that you should be panicked. It is moving higher along the Median Line of the Andrews Pitchfork and consolidating some gains at a previous high. If it were to drop back below 5000

then some alarms should trigger but no one ever said that the confirmation from the Transports had to happen the day the Industrials made a new high. In fact the Dow Theory as practiced by Charles Dow and codified by Robert Rhea missed the first 10-20 % of the move ON PURPOSE in order to be certain that the trend had changed. In an era when you got one price per day and your news from a newspaper that was a good plan. If Iran was going to block the Strait of Hormuz, for example, you did not know it for a week. This is not to say that the confirmation is no longer important. A totally separate debate, but just because the Trannies have not confirmed the Industrials new highs, does not mean the uptrend is not happening. Look at the price action. Trade that, and if you want, save some powder for the the rise of the Trannies.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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