Dow Theory (excerpt)

Dow Theoreticians insist that the stock market averages for the industrial and transportation companies should confirm one another. In a bull market, the Dow Jones Industrials Average (DJIA) and the Dow Jones Transportation Average (DJTA) should both be ascending. In a bear market, they should both be descending. The practitioners of this theory get very jittery if the two indexes diverge or if one of them lags significantly behind the other. So for example, if the DJIA is making new highs and the DJTA is not, or is going the other way, that makes them bearish on the overall market. That’s what happened in early April.

But now, all is well with the world again. The bulls are in charge again now that the DJIA and the DJTA are both happily charging together to new record highs. The S&P 500 Industrials Composite--which is the S&P 500 excluding Financials, Transports, and Utilities--and the S&P 500 Transportation Composite are also prancing along together to new record highs.

Today's Morning Briefing: All Abroad! (1) Dow Theory is bullish for now. (2) From divergence to convergence. (3) Central banks delivering liquidity, while truckers and trainmen deliver the goods. (4) Transport’s forward earnings moving forward. (5) Car loads loaded with oil, autos, and lumber. (6) Intermodal loadings trending higher along with business inventories. (7) Trucks hauling record freight. (8) Rally in transportation stocks fueled more by domestic than global economy. (9) Focus on market-weight-rated S&P 500 Transportation. (More for subscribers.)