The Dow Jones Transportation Index made a 52 week high today. As I have been discussing for months now, the trannies never made a lower low even during the depths of the summer sell-off. In other words, even though the S&P 500 took out the February lows, the transportation stocks never confirmed the downtrend by breaching their respective February lows. Therefore, the historically leading sector appears to be intact, in terms of its reliability as a leading indicator.
With the trannies making a fresh high today, the presumption is that the S&P will take out the 1219 level as well this year. Does it absolutely HAVE to happen? No, nothing is inevitable except death and taxes. However, I believe it is a high probability that the broad indices make new highs this year based on this development. Also, the timing of when the S&P will make those new highs is also a question mark. Nonetheless, the idea is the new highs are, indeed, likely to come.
The bears who cherry-picked facts and data down at 1040 on the S&P conveniently ignored the relative strength in the trannies. Will they continue to do so now, and thus help squeeze the market higher?
(Yes, the Eddie Murphy joke will be thoroughly used and worn out until there is literally not tread left on the tire)