Friday, 18 May 2012

Transports - warning of 2012 doom

I've been talking about the Transports index for weeks now, today was a very important day. The big 5000 level has been taken out. This breaks a holding pattern that the transports have held since January. A huge 5 month long flat top...and its now broken below.

The following chart includes an old 'doomer' count I've had since last year. Ignore the count, maybe even ignore the Fib' retracement levels too (back to the 2009 collapse wave lows). However, you can't ignore todays break under 5k. It is the biggest bearish warning I've seen so far this year.

Transports, monthly, 'doom' chart


If you keep in mind the 'giant H/S' formation chart that I regularly post for the SP' monthly, you can see the same sort of H/S pattern here, except (unlike other indexes) the transports never managed to break the highs from last May.

If the H/S theory is correct, the Transports will likely move lower to around 3500 sometime later this year. That is a fall of around 30%. It would definately imply Sp'1100, if not 1000 at some point. Note that sp'1000 would also confirm the giant H/S theory.

Goodnight from London city.