Why We Have Reason for Concern DOW and S&P 500

The Dow Jones Transportation, the Dow Jones Industrials, and the S&P 500 Indexes have fallen short of important monthly and weekly closes.

The Dow Jones Transportation Index

Until today, the 200 month moving average has not been breached for 33 years (the last time it was breached was in 1976). Overall this is a concerning chart as it gives a leading indication of where the Dow Industrials are going (according to the Dow Theory).

The next major support level on the Dow Transportation index is at 1,918, approximately 23% below the current level.

SPX 500 Index

The weekly close today is beneath both the 2002 and 2008 lows, which is very concerning. The chart of the S&P 500 going back to the 1920’s, could suggest that in the long run the S&P 500 moves to the double top target at 360.

Dow Jones Industrials Index

This chart is far from constructive. We now close the week below 2002 lows which could open the way for a test of 6,356 over the coming weeks/months with interim support at 6,973.

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