The nature of the bounce in transportation stocks over the past month suggests a potential re-test of the January lows.
Back on January 21, we published a post titled, “Transports Can’t Afford To Travel Any Lower”. As the title suggests, the point of the post was that transport stocks, as measured by the Dow Jones Transportation Average (DJT), had plunged to a level that should serve as substantial support. And if it did not, then we were talking about disorderly, crash-type risk potential. Fortunately for these vehicles, they heeded the sign and avoided any (further) “crashiness”. The nature of the month-long bounce since, however, has us concerned that the DJT may be running into a roadblock here soon, at least for the near-term.
Why do we say that? We have often times talked about judging the “quality” of a rally, especially following a significant decline. The quality, which includes metrics such as the breadth and the pace associated with the advance, can give a clue as to the type of rally it might be. For example, does it appear to be merely a dead-cat bounce or potentially a major reversal, etc. In this particular instance, it is the pace of ...
/www.benzinga.com/etfs/sector-etfs/16/02/6350615/chart-pattern-flagging-a-warning-for-transports alt=Chart Pattern Flagging A Warning For Transports>Full story available on Benzinga.com
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