Transports Giving Warning Signal

Transports are not confirming the bullish action on the S&P 500. With the S&P 500 making all-time highs, you would expect Transports to be doing the same. Instead, Transports are clearly under-performing the S&P 500.

Transports Chart

Transports chart is weaker than the S&P 500

Transports are slightly under-performing the market prediction. Still, price action is close enough to not require an update to the predicted path of Transports.

It looks like Transports are doing a continuation pattern lower rather than an oversold market reversal higher. Make sure to review this lesson on trading continuation patterns here.

The under-performance by Transports can really be seen by looking at the Dow Transports Volume Advance-Decline Percent chart.

Dow Transports volume chart.

The advancing volume to decline volume has plunged over the last two days and the PPO histogram bars are dropping.

Ideally, in a bull market with the S&P 500 hitting new highs, you want to see Transports confirming the S&P 500 by hitting new highs as well. The fact that Transports are not confirming the bullish move on the S&P 500 is a big yellow warning sign IMO. It keeps the thesis alive that we could have a market pullback for the week ending September 29, 2017.

Author: Lance Jepsen

For ethical purposes, I try not to hold any position in any stock I profile on unless specifically stated in the article. Owner of Seasoned entrepreneur, investor, and writer. I love God, family, country, stock trading, economics, and helping people learn how to trade.

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Sofi AI Market Sentiment Gauge

Sofi AI Market Sentiment Gauge

Market is overbought.