Transports off Track, DOW Composite Following Suit

Over the last few weeks you have most likely been reading that the DOW Transport Index ($IYT)  has been lagging. Now it has been acting like an anchor, sinking ~2 percent last week. This action parleyed with the action in the Utilities ($XLU) and the Bonds ($TLT), with the DOW Jones Industrial Average ($DJA) below it’s 200-day moving average.

I guess time has caught up with the old blue chip index and we need to take this move seriously. Watch names like United Health ($UNH), Apple ($AAPL), and Disney ($DIS) for either spikes in Implied Volatility, or downside price pressure on the stocks. This would be negative for the blue chips and the markets.

One last note, I was looking at the Industrials ($XLI) price chart and it looks like the sector ETF is about to finish forming a bearish chart formation, the Head and Shoulders pattern. A break of $55.50 in $XLI would be completion of the right shoulder and pattern, really putting pressure to the downside.

Have a good trading day!