The green dots rise and print new highs in the Fall, the industrials move higher, the trannies move higher, the trannies move higher, the Dow moves higher. It was one big party and Dow Theory said all systems go into the end of the year so a toast can be made at new years. Well, that's when the party ends. The Dow moves south for a month not confirming the trannies moving higher. Higher airline stocks and railroads helped keep trannies buoyant and moving higher. KSU earnings were weak, however, and airlines are rolling over, so the party in transports is ending.
There are many different versions on how to account for Dow Theory but keeping things simple, the Dow did not confirm the new high in the Transports in January. This non-confirmation leads to a sell off. Watch the red circle areas to see if the bears start to string together lower lows moving forward, and begin confirming in the down direction rather than upside direction. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.