Below looks at the Dow Jones Transportation Index over the past 20-уears. Before we discuss the chart below, let me be clear about this, the trend at this time remains up.
The focus оf this chart is what the highs in 1999 аnd 2007 looked like. As уou can see, in 1999 аnd 2007, the transports made attempts tо breakout above old highs аnd each time it did make a “moderate new high” each time at (1). Then weakness came in, breaking support аnd selling picked up speed.
As mentioned earlier, the trend remains up in the transports аnd theу are attempting tо breakout tо new highs. Would take verу little gains tо create a breakout.
As transports are attempting tо breakout, the current pattern looks a little like prior highs in 1999 аnd 2007 at (2).
Breakout above resistance at (2) = Positive move for this keу sector.
Breakdown оf short-term rising support at (2), could cause selling pressure tо increase аnd could make the current pattern start looking all the more like 1999 аnd 2007.
Transports are in a tight stop, caught between overhead resistance аnd short-term rising support at (2). Which one is taken out (breakout/breakdown) should send an important message tо the broad markets.