- Transportation sector has been widely used as leading economic activity indicator - The correlation of Dow Jones with Dow Transportation index is high - The divergence between both usually result in sharp rally followed by correction with same magnitude - After last week sharp drop of the Dow Transportation index there is high probability that we are witnessing the same pattern
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There is an article at seekingalpha this weekend that outlines that the Dow does best after a period when there is a divergence in the Transports. See what you think.
Find it consistent with my findings. Recall: "The divergence between both usually result in sharp rally followed by correction with same magnitude". This is not my opinion but what happened previous two times.