DJ Transports Remain Strong
02/17/16 Weekly Re-Lay Alert: “The Dueling Dows – Part II”
“Stock Indices continue to vacillate since reaching critical support (and extreme support) on Jan. 20th. As emphasized at that time, the Jan. 2016 low reinforced a decisive monthly Cycle Progression – that includes the August 2015 low – and projects a subsequent monthly low for June 2016.
As expected & described since late-2014, however, most of these lows are met by violent rebounds… and vice-versa. That also results in divergent highs & lows at almost all of the key turning points (like the variety of lows between late-August & late-Sept. 2015 as well as the diverse highs between early-Nov. & mid-Dec. 2015).
That is why other Indices – including the Shanghai Composite (China) – were expected to set their multi-month lows in February. The (relatively) stronger Indices would bottom first (Jan.) and then help to create divergent (higher) lows in February as the weaker Indices spiked to new (lower) lows.
Those weaker Indices accomplished that – while fulfilling weekly reversal signals & testing/holding monthly support as well as weekly extremes. All of that fulfilled the downside targets and projected cycle focus out to May & June… when new lows are likely.
And even on an intermediate – and sometimes minor – basis, the divergence continues… including ‘The Dueling Dows’ (the leader Transports vs. the lagging Industrials)…
The Transports remain on track for – and are now fulfilling – a rebound to that critical 7350–7450/DJTA range… that actually extends up to 7491/DJTA. That range includes the level of the August 24th low (support turned into resistance), the 2016 high (intra-year trend resistance), a 50% rebound (of its Nov.–Jan. decline), the convergence of the last 3 weekly LHRs and the weekly 21 Low MAC.
The DJTA’s weekly trend pattern continues to corroborate this scenario as well…The Transports have remained positive (on a 2–4 week basis) since turning their daily trend up over two weeks ago. Since then, they have not even neutralized that daily uptrend – increasing the potential for an overall (though volatile) rebound into this time frame.
Once again, the Transports reinforce they are the leaders – a role they have played since Nov. 2014… and since the late-1990’s. Other Indices – since Jan. 20th – have helped to corroborate this scenario…
The MMX (Major Market Index) dropped to a higher low in Feb., as it twice neutralized its daily uptrend. That trend pattern signal projected a rally back to & retest of its Feb. 4th high – a peak that created a 15-day low-high-(high) Cycle Progression target for Feb. 19th.
It could see a retest of its January high – around 1770/MMX – which coincides with its monthly resistance for February.
All of this has reinforced the likelihood for an overall, intermediate rally…”
DJ Transports remain strong, leading rebound from Jan. ’16 cycle low. Volatile consolidation expected until next danger period in April 2016.