This quote comes to mind when I look at the chart above; bottoms are often events and Tops are a process. Could the Dow Jones Transportation be creating a “Topping Pattern” over the past 15-months? Possible!

In this monthly chart of the Transports index, we applied Fibonacci extension levels to the 2003 lows and the 2008 highs at each (1).

The rally off the 2009 lows saw the Transports index test the  261% extension level as resistance in January of last year, where a strong upward trend stopped on a dime. It has now spent the past 15-months attempting to break above this Fibonacci extension level, which comes into play as resistance.

While testing this resistance level, the Transports could be creating a “Head & Shoulders topping pattern!” 

The bullish case for stocks would receive quality good news if Transport can take out this resistance zone!  Keep a close eye on the Transport index the next few weeks as they are dealing with what looks to be a very important price level!





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