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I discussed the idea of looking for a Dow Theory buy signal in this post early last week. I still like what I am seeing from the rails, especially UNP. From a larger perspective, I am looking at a Dow Jones Transportation Average breakout on the horizon. The daily chart below gives us a diamond-like consolidation pattern, after marking time for over three months now. You will notice that it is flirting with breaking up and out of it today. In addition to the real estate and homebuilders complex, I believe the trannies represent another area of the market that should benefit from a rotation within equities, even as the Apple’s consolidate.
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