Does Anyone Remember Charles Dow?
Something interesting happened with the Dow Jones Transportation Average recently. Or, more precisely, didn’t happen. The S&P 500, Nasdaq-100 and Dow Jones Industrial Average all breached their October lows amid this year’s pullbacks. But Transports haven’t even come close to those levels.
Notice how DJT bottomed last week over 14,000. That was 1 percent above its trough near the end of the third quarter and start of the fourth quarter.
Turn back the clock a little further to the late 1800s, when Charles Dow famously noticed that railroads and shipping stocks could confirm moves in the broader market. In the current case, “Dow Theory” may be providing non-confirmation of weakness. And that could be bullish.
Second, consider the converging trendlines as DJT eased lower. Is that a falling wedge, another potentially bullish reversal pattern?
Finally, you have the bigger picture because Transports are a classically cyclical part of the market that often benefit from a strong economy. With Covid cases falling, the U.S. reopening and the spring/summer approaching, investors may view Transports as a potential beneficiary.
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This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
Notice how DJT bottomed last week over 14,000. That was 1 percent above its trough near the end of the third quarter and start of the fourth quarter.
Turn back the clock a little further to the late 1800s, when Charles Dow famously noticed that railroads and shipping stocks could confirm moves in the broader market. In the current case, “Dow Theory” may be providing non-confirmation of weakness. And that could be bullish.
Second, consider the converging trendlines as DJT eased lower. Is that a falling wedge, another potentially bullish reversal pattern?
Finally, you have the bigger picture because Transports are a classically cyclical part of the market that often benefit from a strong economy. With Covid cases falling, the U.S. reopening and the spring/summer approaching, investors may view Transports as a potential beneficiary.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradingView is not affiliated with TradeStation Securities Inc. or its affiliates. TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.