I hope you’re paying attention. Because while everyone keeps insisting “nothing is going up,” more and more stocks keep going up.
Remember when they were laughing at me in early November?
Well… the Dow Jones Transportation Average just closed at its highest level since February.
And the disrespect I keep seeing out there for one of the most important indexes in market history is absolutely mind-blowing.
Nobody cares. Nobody even wants to acknowledge it.
It’s like investors are pretending it isn’t happening — as if ignoring it will somehow make it go away.
Trannies Hit New 9-Month Highs
Here’s the chart — and here’s the massive base the Dow Transports are trying to complete as they play catch-up to their cousin, the Dow Jones Industrial Average, which has already been making new all-time highs since August:
The Dow Jones Transportation Average was originally called the Railroad Average when Charlie Dow first built it in the summer of 1884.
Back then it was filled with names like Missouri Pacific, New York Central, and Union Pacific (UNP), which is still in the index today.
Charlie’s logic was simple:
- The companies that make the goods are the Industrials.
- The companies that deliver the goods are the Transports — which at the time meant railroads.
In 1970 the index was renamed the “Transportation Average” to reflect the addition of airlines and trucking stocks, but the philosophy never changed:
If the makers of the goods are hitting new highs and those that deliver the goods are hitting new highs, the market is usually in good shape.
It’s when one index makes new highs and the other refuses to confirm that trouble tends to show up.
This is Dow Theory 101 — and it’s a core part of the foundation for everything we do here at TrendLabs.
Dow Theory Confirmation
The clock has been ticking. We’ve been waiting for confirmation from the Transports.
The Dow Jones Industrial Average broke out to new all-time highs back in late August — three months ago.
And now the Dow Jones Transportation Average just closed at its highest level since February:
The point is simple: They’re both making new highs.
This isn’t 1999, where one index ripped higher while the other rolled over ahead of an epic meltdown.
These classic Dow Theory divergences consistently show up before major declines. We saw one in 1999. We saw another ahead of the 2008 financial crisis. We saw it in 2015. And we saw it again in early 2020 before the COVID crash.
This is one of the most consistent indicators I’ve ever come across — and trust me, I’ve seen them all.
So here’s the bottom line: It’s a bull market.
More stocks are going up, not fewer — no matter how loudly they insist otherwise.
If Charlie Dow were here today, he’d be the first one telling you this.
But he’s not — so I’m running point.
Big shoutout to Charles Dow, the OG technician who’s still schooling everyone 140 years later.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs