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Tackle Today: Choo, Choo! All Aboard the Transports!

May 6, 2021

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Longest winning streak ever for Dow Transports

Traders,

In 1896 Charles Dow pioneered the idea of stock indexes with his creation of the Dow Jones Industrial Average. He viewed the basket of big industrial companies as a proxy for economic health. Soon after, he built the Dow Jones Transportation Average to track railroads and other related companies. He theorized that both averages needed to confirm each others movements for true bull and bear signals to emerge.

In other words, new highs in one needed to be echoed by new highs in the other. The reason was built on sound economic rationale. The titans of industry that comprised the Industrial Average could manufacture mountains of goods, but they ultimately needed to ship them to consumers across the nation. Industrials painted half the picture. Transportation painted the other.

Analyzing the Indexes together gave Mr. Dow a clearer picture of economic health. The idea that the market averages must confirm each other is a basic tenet of what became to be known as Dow Theory.

We bring up this little history lesson for one simple reason. The Dow Transports Average just notched its twelfth straight weekly gain in a row. It’s the greatest such streak since Charles Dow first created it and speaks to just how optimistic traders are about the ongoing economic rebound.  

#TeamTackle


Chart of the Day

Dow Transports are Trucking to the Moon

Records are being smashed this year as stocks continue to reach for the stars. Have you noticed the run-up in railroads, truckers, and air lines? They have transport related indexes and ETFs going bananas.


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