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A familiar theme across many charts in 2011 has been the breakout and quick throwback to retest the move in short order, as opposed to breaking out and never looking back in the form of breakaway gaps. The all-important transportation stocks are doing just that, and so far so good, despite today’s nasty broad market sell-off. 4,700 remains crucial for the Dow Jones Transportation Average, and the rising 20-day moving average is coming up to touch price. Note also this represents the upper limits of the prior multi-month trading range. The trannies had been making progress in recent weeks after lagging for much of 2011, until firm resistance was found up at 5,000. A constructive scenario going forward would be several weeks of back-and-forth between 4,700 and 5,000 before breaking out, whereas a break below 4,700 would have to force extreme caution on the part of traders.
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