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Dow Transportation Stocks Sector Is Testing Resistance

Stock-Markets / Stock Markets 2019 Apr 25, 2019 - 06:37 PM GMT

By: Chris_Vermeulen

Stock-Markets

The DOW Transportation Index continues to test resistance near $10,050 as earnings drive the NQ well past historical all-time highs.  Our interest in the Transportation Index is because it acts as a fundamental indicator for the US and global economies in terms of future transportation/shipping expectations.  When the Transportation Index rises, it is a good sign that business and consumers have faith in the future economy and the continued demand for goods to be supplied to retailers and distribution centers.

The fact that the TRAN is back to near December 2018 highs means we have reached an expected economic expansion level that equals that level just before Christmas 2018.  A continued rally would push expectations even higher going into the Summer months.  With earnings hitting the market hard today driving a strong rally in almost all the major US stock indexes, we are surprised that the TRAN did not move a bit higher on the news.


Should the resistance level near $11,050 continue to operate as a ceiling for the TRAN, we’ll know soon enough as price should begin to move back below $11,000 and possibly attempt to retest $10,800.  A key Fibonacci trigger level currently rests near $10,800 that would indicate a potential for a new bearish trend if this level is broken.

This Weekly TRAN chart, below, highlights just how important the current resistance level really is.  This $11,050 level actually plays a key role in the 2018 price rotation and is the key resistance level for the December 2018 rotation peak.

As we’ve continually suggested, Fibonacci price theory suggests that price must always attempt to establish new price highs or new price lows.  If this new price high, above the $11,050 fails, then price should attempt to rotate lower and attempt to break the $10,000 low level created in early April 2019.

We suggest traders take a very cautious long-biased stance in the markets right now.  Weakness could come out of the shadows fairly quickly as earnings hit.  The Iran Oil news hit the markets quickly on Monday.  We could wake up to some dire earnings news this week that could send the markets lower and push some of these resistance levels into a topping formation.

Additionally, as you look at this Weekly chart, pay attention to the fact that we could be setting up a Right Shoulder of a Head-n-Shoulders pattern if new all-time highs are not reached.  There are many ways to attempt to read this chart and the TRAN should lead the markets if a price move does breakout.

Our research says we should continue to see an upward price bias for at least another 10~35+ days before any real sign of weakness shows up.  We are still urging traders to take a very cautious approach to their trading until we see the TRAN break to new highs.  We feel it is wise to trade this area very cautiously over the next 30+ days.

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Chris Vermeulen
www.TheTechnicalTraders.com

Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and is the author of the book: 7 Steps to Win With Logic

Through years of research, trading and helping individual traders around the world. He learned that many traders have great trading ideas, but they lack one thing, they struggle to execute trades in a systematic way for consistent results. Chris helps educate traders with a three-hour video course that can change your trading results for the better.

His mission is to help his clients boost their trading performance while reducing market exposure and portfolio volatility.

He is a regular speaker on HoweStreet.com, and the FinancialSurvivorNetwork radio shows. Chris was also featured on the cover of AmalgaTrader Magazine, and contributes articles to several leading financial hubs like MarketOracle.co.uk

Disclaimer: Nothing in this report should be construed as a solicitation to buy or sell any securities mentioned. Technical Traders Ltd., its owners and the author of this report are not registered broker-dealers or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. Never make an investment based solely on what you read in an online or printed report, including this report, especially if the investment involves a small, thinly-traded company that isn’t well known. Technical Traders Ltd. and the author of this report has been paid by Cardiff Energy Corp. In addition, the author owns shares of Cardiff Energy Corp. and would also benefit from volume and price appreciation of its stock. The information provided here within should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. Technical Traders Ltd. and the author of this report do not guarantee the accuracy, completeness, or usefulness of any content of this report, nor its fitness for any particular purpose. Lastly, the author does not guarantee that any of the companies mentioned in the reports will perform as expected, and any comparisons made to other companies may not be valid or come into effect.

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