Although the major stock market indices are just a few percent from all-time highs, the market is clearly at an interesting and important juncture here.

Since setting new all-time highs in March, the major stock market indices have churned sideways, with only the market leading Nasdaq Composite (INDEXSP:.INX) making marginal new highs.  While this divergence may seem minor in the scheme of things, it comes at a time when chart patterns are testing resistance on longer time frames.

Today, we’ll look at two charts (covering 4 major indexes) that active investors need to be watching.

Dow Jones Transportation Index

The Dow Transports (INDEXDJX:DJT) may be in the process of creating a repeating historical (bearish) pattern that reared its head in 1998-99 and 2007-o8. The bulls will need the transports to blow through the red resistance line to breathe a sigh of relief. If not, it could spell trouble for the transports. You’ll also notice the current uptrend line at point 1 (blue). A break below this line would be the first warning to investors.

The transports are a key cog in our economy, so they also tend to be a key indicator for stocks historically.


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