Familiar Battle Line

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Recall how often I have mentioned the 4,700 level on the historically market and economy-leading transportation sector, via the Dow Jones Transportation Average. Indeed, the 4,700-5,000 range had represented the recent struggle to break out from the summer trading range. The selling over the past two weeks had the bears winning that particular battle, pushing price back below 4,700.

You can see on the daily chart below that even with today’s monster rally that 4,700 level remains a serious battle line. A mere bounce up to it should come as no surprise from oversold conditions. Soundly recapturing it by the bulls, on the other hand, would be more indicative of the potential for something other than a simple reflex rally.

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