The Dow Transports

[HenryTo]

Some of my readers may not have kept track of the Dow Transports but it is interesting to note that from the bottom in late August to the most recent all-time high in late December, the Dow Transports has rallied approximately 30%.

Therefore, a more serious correction may be in order for the Dow Transports in the next few weeks as this major index has not really undergone a serious correction in four months. Potential support? Most probably around 3,300 - which is right at the uptrending support line connecting the bottoms in March 2003, May 2004, and August 2004. Such a correction translates into a 10% further downside - which is actually not a very far-fetched target considering how fast this index has risen over the last four months.