Some Downside Levels to Watch in the Transports and Industrials

• Posted by Greg Harmon
• on August 20th, 2013

Checking in from the road it looks as if the downside plays are winning as the charts told this weekend. With that in mind there are several levels that will become important for Dow Theorists as the correction continues. With an eye towards the Transports ($DJT, $IYT) are now a few within 3% of the current levels.

What stands out is that the bearish Shark is playing out. Price has already moved through the first target at 6403 and is holding at a 50% retracement, half way to the 2nd target at 6228. There is also a Measured Move lower to about 6150. Below those the full retracement at 5944 comes into play.

The other half of the Dow Theory pair, the Industrials ($DJIA, $DIA) is set up similar. The Shark in this one is now close to a 61.8% retracement, target two at 14960, with 14551 below. It is technically oversold so a bounce is likely not far off, even if only short term.

A move below 14551 and then confirmed by a new low in the Transports would turn nearly every technician bearish with a Dow theory confirmation lower. If you want a line in the sand that is as close as you will get from me.

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