Tuesday, March 03, 2009

Transports: What a mess...

Transports are hurtling at speed ever lower. No immediate sign of support until it reaches the 2001/03 double bottom at 1,942 and 1,918 with closing support around 1,983. Given the rate of decline I would expect an overshoot of these levels. Note how on-balance-volume is very close to its 10-year low while the MACD has been completely routed.

Looking at stochastics it would appear oversold based bottoms typically occur with a double bottom in the indicator. The timespan between bottoms can run as long as 6 months; so although a bounce may be favoured over the short term it seems probable there will be another run at the lows this summmer.

There will be no economic recovery until the Transports pick up, so keep the hard hat on.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website