Dow transports are out of position to satisfy Dow Theory

Though the Dow Jones Industrial Average is poised to set a record, as the S&P 500 Index did last week, Dow Theory followers may be disappointed for some time. The theory holds that the Dow Jones Transportation Average must also reach a new peak to confirm stocks are going higher, and it’s nowhere close. At Monday’s close, the transports were 12% below their September record and the industrials were just 0.4% away from their highest-ever level, reached in October. The performance gap sent the transports to the lowest level relative to the industrials since October 2012, as shown in the chart.