For the Dow Theorists...

Transports vs Industrials (Dow 20 vs Dow 30) or Dow Theory (at least a part of it) is at work this morning with non-confirmation between the two, Transports are seeing weakness, I'm guessing this has something to do with the Empire Manufacturing Index and the New Orders component dropping off from 10.98 to -0.21, not a good print.

In any case, we have been talking about apparent weakness showing up in transports a good portion of this year and recently.

Here's what we have today, I don't see this as a trade entry, but if you took one of the past trade entry ideas for Transports (IYT) then I certainly wouldn't be closing the position today.

 This is the Dow -20 in green vs the Dow 30 in red, you can see areas of non-confirmation and trend changes.

This looks like a right shoulder of a H&S top, there was a bear flag/pennant that looks to have broken, but I'd still expect volatility around it, that may offer an entry, but be aware that there may still be a volatility shakeout run AFTER the neck line is broken, usually the top of the right shoulder is a decent enough entry to protect you from draw down on that move, that's the final area I'll short a H&S top, this is the second of 3 areas.

The main point is the non-confirmation as there has been a lot of Beta and momentum chasing in transports.

Here's this morning's gap up and FAIL on a 60 min chart at the apex of a bear-flag/pennant.

This is the daily 3C transports chart, you can see the stages of the major cycle pretty clearly.

This 2 hour chart's negative leading divegrence covers the entire H&S area.

 As does the 60 min

This is the 30-min leading negative in the flag-like consolidation.

and more detail with a 10-min

And more detail with a 3 min from the "W" bottom at the broader market's head fake move area to the current area.

Like I said, I'd prefer not chase transports, but we have featured them several times recently so some of you may have short positions already. Again the most important concept here is the non confirmation as in Dow Theory.