Although the major stock market indices are just a few percent from all-time highs, the market is clearly at an interesting and important juncture here.
Since setting new all-time highs in March, the major stock market indices have churned sideways, with only the market leading Nasdaq Composite (INDEXSP:.INX) making marginal new highs. While this divergence may seem minor in the scheme of things, it comes at a time when chart patterns are testing resistance on longer time frames.
Today, we’ll look at two charts (covering 4 major indexes) that active investors need to be watching.
Dow Jones Transportation Index
The Dow Transports (INDEXDJX:DJT) may be in the process of creating a repeating historical (bearish) pattern that reared its head in 1998-99 and 2007-o8. The bulls will need the transports to blow through the red resistance line to breathe a sigh of relief. If not, it could spell trouble for the transports. You’ll also notice the current uptrend line at point 1 (blue). A break below this line would be the first warning to investors.
The transports are a key cog in our economy, so they also tend to be a key indicator for stocks historically.
Large Caps, Small Caps, and Banks At Key Resistance
In the four pack below, you can see that other major parts of our market are “running” into resistance as well (see arrows and blue shared areas). Large caps (S&P 500), small caps (Russell 2000), and banks (Bank Index) are all chopping at key overhead resistance… and all at the same time. Note the transports are shown again in the lower right corner.
These levels have provided resistance for the past several weeks and may continue to do so. A break higher or lower will bear importance on your portfolio so put them on your radar!
Thanks for reading and good luck out there!
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.