Transports Setting the Pace
- Posted by Greg Harmon
- on March 19th, 2014
The Dow Jones Transportation Average ($DJT, $IYT) pulled back with the market in January. But after finding support at the 100 day Simple Moving Average (SMA) and consolidating it jumped higher and made a new all-time high at 7627.44. That was March 7th, and it has been sitting here since. Solid strength in the transports. Dow Theory looks for the Dow Jones Industrial Average ($DJIA, $DIA) to make a new high as well to confirm the broad trend continuing higher.
But that has proven difficult so far. The attempt on March 7th fell short of a new high. it missed by less than 83 points or 1/2%, but that matters. To the Dow Theory that is. With the last two days forming a higher low and closing in on a test of the highs will the second time be the charm? It is only 1.5% away as of Tuesday’s close. But we will have to wait and see. The longer we wait the more tense traders and investors will become about a another failure. But just how long do the Industrials have to make a new high? Well the answer is generally, as long as they want to take. Much of trading is a test of patience and this aspect is no different. If the Transports make a new all-time high Wednesday, it does not mean that
the Industrials have to do the same Wednesday, or Thursday or next week. In fact as long as the Industrials do not make a new low then confirmed by a new low in the Transports they can take their sweet time going higher. Do you have the patience to wait?
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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