On 1/23, the S&P Railroad index below, was at resistance- creating a bearish rising wedge. A breakdown of a similar pattern last summer led to a sharp broad market decline of 20% in a matter of weeks. The question 3 weeks ago was…Could the Railroad Index Derail the broad markets rally, by declining out of this pattern? (See post here)
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Below is an update to the S&P Railroad index, reflecting a swift decline is taking place as it breaks down from the bearish rising wedge. The pattern of late looks a good deal like the price action of last summer!
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This index was a good leading indicator last summer, reflecting that weakness was ahead for the equity markets. Keep a close eye on the index again as it down almost 10% off its highs and is breaking a key support line.
