The Dow Transports are selling off as the Industrials are making new highs. That’s a no no in Dow Theory. We pointed out a similar divergence on August 1st.
Not as relevant as it used to be, but something to keep on your radar. Transports approaching 200-day moving average at 9,117.59 (corrected on Aug. 19) and diverging from Industrials. — GMM, August 1
The divergence signaled the 2 percent correction in the Dow Jones Industrials, which began on August 7th. Note also the Transports 50-day moving average is just 0.25 percent lower.
Looks like the market going to hand it off to energy sector into year-end. In a normal market, Transports sell with rising energy. Crude oil closed over $57 p/bbl today.