Technical Talk: Fatigue sets in on stock markets
The comments regarding the Dow Jones Transportation Average were provided by Kevin Lane of Fusion IQ.
“As seen below, the Dow Jones Transportation Average (TRAN) has stalled and turned down from resistance at the 4,075 level (red lines) twice in the past few months. This inability of the transports to get above this level suggests at the very minimum the economy’s recovery path is being called into question.
“Technically the index is currently testing the lower end of its upward sloping channel (green line). While in the short run the index may find a shallow bounce from this level, the failure twice now at a key resistance level is the greater trump card.
“The burden of proof now rests on the transport bulls and the index is an underweight sector that we expect to continue to underperform until it can work above resistance.”
Source: Kevin Lane, Fusion IQ, October 27, 2009.
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