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Over the past 15-months, the S&P has followed the lead of Transports.
Transports peaked ahead of the broad markets in early 2015 at (1) above. As the Transports started heading south, the broad market struggled to make gains for the rest of 2015.
Transports hit dual support at (2) above and started pushing higher. The broad market followed the upward lead of Transports. Premium Members went long Transports, as it was testing this support zone at (2), after falling much harder than the broad markets in 2015.
Now the Transports are testing dual falling resistance at (3) above. Premium Members sold holdings of Transports as resistance was being hit.
We continue to believe what the Transports do at (3), will send an important message to the broad markets.
As mentioned above, a breakout would send a bullish message to the broad markets and a breakdown, would send a concerning message.
Keep a close eye on Transports the next few weeks. What they do at this resistance test, should be important for the broad markets.
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