The Dow Jones Transportation Average has been trading in a channel with well-defined resistance and support levels for nearly six months now. I last mentioned the channel when the Index hit resistance at 5200 in late-October. With the strength in the futures market this morning it appears Transports will likely respect its lower trend line.
I’m not overly surprised we are seeing some strength in equities this morning, an oversold rally has been forecasted by what appears like every trader and money manager I follow. The fact that so many have been looking for a bounce here, it just seems like that’s too much short-term bullish sentiment for whatever rally we do get to be sustainable.
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