Keys To This Week is one of 8 different reports that we produce for subscribers throughout the month. It includes a bullet-pointed list of what we believe are the most important and potentially market-moving charts, indicators, and data series to be aware of during the current week.

The following is one of this week’s twelve “Keys” for the US stock market.

Report: Keys To This Week
Date: April 13th, 2015
Subject: US Stock Market

Key # 8 of 12: Market Breadth, Dow Transports (DJTA), NEAR TERM BULLISH

The percentage of Dow Transportation Index (DJTA, see Chart 6 below) constituent stocks trading above their 50-day moving average is currently bottoming/rising from an historically low extreme of 31%, indicating washed-out market breadth, that has previously coincided with near term US market advances.

Chart 6 of 14
Chart 6 of 14

The Dow Transports have been the weak link in the US stock market lately.  Moreover, this economic barometer has been negotiating is 200-day moving average — a widely-watched major trend proxy — since March 26th, identifying this level as a major decision point from which its next significant directional move is likely to begin.

This chart suggests favorable conditions, from a market breadth standpoint, for the Transports to begin a new near term move higher now, just as it did on January 14th, and previously on October 15th, August 8th, and during April and February of 2014.  If the Transports fail to rebound from here, however, it would be analogous to a market that cannot rally on positive fundamental or economic news and warn that a deeper, more sustained decline is coming.


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