from Dan Norcini:
Dow Theory conventionally holds that moves higher in the Dow should be validated or confirmed by matching moves in the Dow Transportation Average. When divergences between these two indices occur, it is something that one wants to generally take note of. It does not always signify a market reversal but the signal is reliable enough that only the foolhardy would ignore it.
The first chart is of the Dow Jones Industrial Average. Note how it is well above its 50 day moving average and has been since the start of this year.
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