Chart of the Day - Monday, August 16th, 2021

Today’s Chart of the Day was shared by David Keller (@DKellerCMT). It's a chart of the Dow Jones Transportation Average over the past two years. Part of the bear case over the past few months has been the lack of participation from Transportation stocks. It has been more than three months since we've seen new highs in the Transportation Average. Meanwhile, the Dow Jones Industrial Average has continued to print new highs. Typically, you want the companies that move the goods (Dow Jones Transportation Average) to confirm the strength in the companies that make the goods (Dow Jones Industrial Average). When the two averages are in disagreement it is known as a Dow Theory Sell Signal. The good news is that things have begun to improve for the Transports in the past week. David points out that the Transportation Average has reclaimed its 50-day moving average, and it's attempting to break out of a three-month downtrend. While Transportation stocks are still far from an all-time high, it's encouraging to see an improvement from this key area of the market.