*See below charts for theory.
Several instances can be seen on the long chart - of the dow transports (green line) and dow industrials compared - where the transports peaked first, the dot com era bull market being the most dramatic. The evidence is clearly there, I don't understand how anyone can deny it.
The most recent action as can be seen better on the shorter time frame chart shows the transports are now lagging the industrials so based on theory the industrials should peak soon. The transports should finish their lagging rally by November 5th +/-day.
http://bigcharts.mar...&mocktick=1.png
http://bigcharts.mar...&mocktick=1.png
The theory says the transports go down first because they are on the frontline of delivery to the retailers etc. When demand starts to slow from consumers then stores don't order as much and the transportation companies get less business. Eventually all this filters back to the manufacturers and the industrial stocks start to go down too.
Edited by Russ, 13 October 2007 - 08:52 AM.