Why Do Transports Matter In The 21st Century?

There is a lot of talk in the news right now about a potential market crash.  This fear is fueled for many reasons, one of which is that the Dow Jones Industrial Index remains relatively strong while the Dow Jones Transportation Index has fallen.  This is known as “Divergence.”  While it is troubling, make sure you have a clear understanding and strategy before you buy into the hype and sell out of the market.

One of the core tenets of the Dow Theory is the need for confirmation.  If the stocks compromising the Industrial Index move significantly upward, the Dow Theory is loath to call a “bull market” until the stocks compromising the Transportation Index move upwards as well.  Originally the Transportation Index was comprised of railroad stocks which primarily moved the consumer goods that the Industrial companies made.

Even though the Transportation Index is no longer solely comprised of railroads, companies such as UPS and FedEx as well as airlines, truckers, etc.still transport goods from the Industrial companies to consumers.  The Transportation Index has been falling of late and this can be an indicator that the Industrial Index may fall as well.  However, as we have said in our book and our newest newsletter, “the primary trend is assumed to continue until definitely proven otherwise.”

Don’t be caught off guard!  Know the strategy, follow our newsletter, and invest wisely!



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Mark Hulbert of Marketwatch noticed, as we did and told our subscribers in an email sent two days earlier! Read the article HERE.



Mark Hulbert of Marketwatch: One of the geniuses of the Dow Theory is that it counsels against overreacting to every cloud on that horizon. That’s why, as Jack Schannep, editor of TheDowTheory.com, reminds us, the “current trend is assumed to continue intact until it is proven otherwise.” Read the article HERE.

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