A dow theory sell is still setting up for the markets and a lot of people seem to have gotten stopped out on their transports shorts while BURNanke set his sights on ruining another perfectly good indicator...the Transports Dow Theory Non Confirmation. On the chart below you can see the setup. I have had a cycle low (Thick blue line) called 4 days ago so I expected a bounce...but like everything in this market, the proportions seem to push things to reasonable limits or slightly beyond.
(Orange line is the Russell 2K) We are now in a strong resistance area and have a potential setting up to imminently generate a second resistance cycle today or Monday. If that happens, the probabilities go way up for a significant decline in the Transports.
The transports bounce plus the recovery off the lows in the AM for the major indexes has nearly everyone looking for new highs...
The Baltic Dry Index has been selling off for quite a while now and finally has a up weekly candle so far for the week...perhaps Transports take a cue from BDI and continue down...or there is something else setting up.
