Domestic Argument: Dow Jones Transports vs. Industrials

According to the century-old “Dow Theory,” both the Dow Jones Industrial Average and Dow Jones Transportation Average need to move in tandem to confirm a market’s trend. It highlights how making goods is one leg of the industrial economy (Dow Jones Industrial Average) and moving those goods around (Dow Jones Transportation Average) is the second leg, so their trends should be in sync.

The transports are highly cyclical stocks that are sensitive to swings in the economy. The index, which includes bellwethers FedEx and UPS, is often seen as a leading indicator for stocks and the broader economy.

Source: http://blogs.wsj.com/marketbeat/2012/02/13/morning-marketbeat-dow-transports-wave-warning-flag/

Source: http://www.vulpesinvest.com/announce/index.html

Source: Things That Make You Go Hmmm. Grant Williams. Feb. 26, 2012.