DOW Jones Industrials, Transportation and the SPX

SP:SPX   S&P 500 Index
Some food for thought of what may come.

Speaking simply, in Dow Theory, when the transportation index drops, speculators would look for the Industrials and the SPX to follow, as they generally tend to tango with each other.

You can see by the chart, there is a significant divergence between DOWT, DOWI and SPX . Some are saying this is a bearish divergence and the naysayers suggest a top has been reached and a run to the downside could happen.

But, you have QE3 in progress with the Fed pushing money into the US economy. So it is possible that transportation would pick up.

Either way remember the market goes where it wants all you need to do is ride it.


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