Transports could be repeating 1999 & 2007 now!

Below looks at the Dow Jones Transportation Index since 1994. Is it possible that the Transports index is repeating the patterns that were created back in 1999 & 2007? Below is an update on a potential pattern that we have been sharing with members for months.

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In 1999, Transports closed slightly higher than in 1998, which appeared that a bullish breakout was in play. Quickly the index reversed and broke support at (1), which was followed by a good deal of selling pressure, driving the index much lower. The breakout was nothing more than a fake out in 1999.

In 2008, Transports closed slightly higher than in 2007, which appeared that a bullish breakout was in play. Quickly the index reversed and broke support at (2), which was followed by a good deal of selling pressure, driving the index much lower. The breakout was nothing more than a fake out in 2008.

Over the past couple of years, the pattern in the transports looks a good deal like it did in 1999 & 2007. As we have been sharing with members for month, the odds of a repeat are low, yet if the pattern we are sharing would happen to be correct, the impact could be quite large.

At this time the Transports index is testing rising support at (3). Even if the pattern do not repeat, if support would give way at (3), it could encourage selling in this important index.

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These Three Charts Are Warning the Market Could Soon Experience an "Event"

The markets are speaking, but no one is listening.

The single driver of the stock market since election night is the hype of a Trump-policy driven economic boom. The economy is booming, but based on expectations NOT actual policy changes.

This is a critical distinction.

Stocks are MOST susceptible to violent drops (or even Crashes) when illusions are shattered. The illusion of major changes to the US economy is about to be shattered.

The markets are already telegraphing this.

The single most important stock market index for assessing “risk on” vs. “risk off” is the Russell 2000. What the Russell 2000 does… the rest of the market soon follows.

On that note, the Russell 2000 has just staged a final blow off push to the upside. And. It. Failed. The momentum here has shifted and we could drop to that red box (a 5% drop) in a matter of days.

Put simply, this chart is telling us that the market has just entered “risk off” mode.

Then there’s the Dow Jones Transportation Index.

This is THE most economically sensitive index for the markets. Transports “get” the economy better than any other group of stocks.

On that note, Transports are telling us that the economy is not in fact booming… it’s basically just treading water, no matter sentiment says. In fact, we’ve got a very nasty Head and Shoulders pattern forming here.

If the economy was really roaring, Transports would be soaring. They’re not. If anything, they’re getting ready to drop 1,000 points in the next 30 days.

Finally, and most importantly, there is High Yield Credit or Junk Bonds. These represent the credit cycle. When credit growth is strong here, financial conditions are strengthening in the financial system and risk does well.

When credit growth is weakening, or worse, contracting here, financial conditions are worsening in the financial system and “look out below.”

On that note, Junk Bonds are rolling over and preparing to break out of a textbook perfect bearish rising wedge pattern. This is telling us that the entire move from the February 2016 bottom is about to come unraveled. We could easily see stocks drop 10% from current levels if this pattern is confirmed.

These three charts, taken together, suggest the markets are about to experience an “event” in which risk comes unhinged. When this happens, the markets will adjust VIOLENTLY to the downside.

To pick up a FREE investment report outlining three investments that you could make you a ton of money when the markets collapse… 

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Stock bulls; Concerning if weakness starts here

Although the major stock market indices are just a few percent from all-time highs, the market is clearly at an interesting and important juncture here.

Since setting new all-time highs in March, the major stock market indices have churned sideways, with only the market leading Nasdaq Composite (INDEXSP:.INX) making marginal new highs.  While this divergence may seem minor in the scheme of things, it comes at a time when chart patterns are testing resistance on longer time frames.

Today, we’ll look at two charts (covering 4 major indexes) that active investors need to be watching.

Dow Jones Transportation Index

The Dow Transports (INDEXDJX:DJT) may be in the process of creating a repeating historical (bearish) pattern that reared its head in 1998-99 and 2007-o8. The bulls will need the transports to blow through the red resistance line to breathe a sigh of relief. If not, it could spell trouble for the transports. You’ll also notice the current uptrend line at point 1 (blue). A break below this line would be the first warning to investors.

The transports are a key cog in our economy, so they also tend to be a key indicator for stocks historically.

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This article was written for See It Markets.com.

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