Mid Week Review

Does the Dow Jones Transportation Average ($DJTA) lead the market? According to Dow Theory as I understand it the $DJTA should lead in a move to the upside in a recovery. Are we in a recovery or is this the beginning of a new leg to the downside in the market? Only time will tell but note that the faster moving average (blue line) on the chart below of the $DJTA has crossed the slower moving average (red line) to the upside yesterday. Click on chart to enlarge.

Notice how the chart of the S&P 500 below has the same moving averages as the chart above but that the moving averages are just crossing today indicating that indeed the $DJTA is leading the market to the upside. Click on chart to enlarge.