A Message from the Dow Transports

The Dow Transportation Index has been underperforming the S&P 500 for the entire month of February.  That alone didn’t concern me because of the overall trend and bullish backdrop.  What concerns me now is that the Transports are not running to new highs.  The $SPX closed above the Bin Laden top on February 16 and the $TRAN has been selling off — not a good sign.  I’ve given the Transports the benefit of the doubt because these things often take time to resolve.  Time’s up.  We are now officially in warning territory.

The overall trend is higher and will continue to be.  I am very bullish for higher prices in equities over a longer time horizon, but we’re setting up for a near-term pullback.

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