Dow Jones Transportation

Authored by James Stack via InvesTech.com,

From public confidence to bullish sentiment to the normally mundane employment data, the U.S. economy and stock market are reaching historic levels not seen in decades.  Last month, consumer confidence hit its highest level since December 2000.  The percentage of bullish investment advisors recently touched lofty levels that were last reached in January 1987.  And this month, the U.S. Department of Labor announced that job layoffs dropped to a 44-year low!

The technical damage from yesterday has been severe.

Does this mean that stocks won’t bounce? No. But it is a major wake up call to investors that the market is in danger of going lower. MUCH lower.

The Russell 2000 leads the overall market. It is right at support today. If it breaks this line, the market could crash, unwinding the ENTIRE move from November 6 in a matter of days.

The economically sensitive Dow Jones Transportation Index (DJTA) has already taken out critical support.

Below looks at the Dow Jones Transportation Index over the past 20-years. Before we discuss the chart below, let me be clear about this, the trend at this time remains up.

Excerpted from James Stack's InvesTech.com,

Technical Evidence: Confirming a bear market