Derailed

If planes, trains, and ships reflect the heartbeat of the economy, someone in the room is going to yell, “CLEAR” really soon. The Dow Jones Transportation Average Index (DJT) has come completely unglued, and now faces a critical downside support point. We understand that economic growth is abysmal, and there’s no hope of getting past the first gear; cheaper fuel prices should be helping the margin for transportation stocks, but that’s not impacting share prices.

I think the selling is extremely overdone, but it shouldn’t be dismissed out of hand. The good news- near-term is that the DJT is at a perfect double bottom, which usually is a big buy signal. It’s not a component of the DJT, but Boeing (BA) is the biggest proxy for transportation in the world. Monday night after the close, it announced a dividend hike and replaced its old repurchase plan with a new $14.0 billion plan.

I continue to say that the damage done this year to the average stock is tantamount to a market crash. Most stocks aren’t just lower; they have been wiped out…yesterday was no different.

Dow Jones Industrial Average

The Dow made an impressive reversal, holding at the same exact point it held on November 13. However, it closed below the 50 and 200-day moving average. It’s still very dicey, but 17,500 is a resistance point the index needs to cross; and of course, close above 18,000 after the conclusion of the Federal Open Market Committee (FOMC).