Then, May 21, 2014 and now charts as usual. Since the high the transportation index has dropped about 30% or so. It is now approaching the channel , or is right on the upper side. Normal regression to the mean, together with the pendulum almost always swinging too far, virtually guarantees that we will visit the other side or even lower.
In DOW theory terms this is a huge “non-confirmation” between the transports and the industrials. It is the writing on the wall for everybody to see. Ignore it at your own peril. Now the transports do not do this just to be recalcitrant. Things are actually not that good as is evidenced by the BDI, or Baltic Dry Index which basically measures the costs of shipping dry goods globally. Read, roughly, costs of container transport. Here is a longer term (hard to find) chart;
It is showing a new low value just above 300 today, it comes from 10,000. To me it looks a lot like a diagonal or wedge. If correct we will soon complete wave 3, bounce up in wave 4 and then make new lows again. You do not want to be the owner of a large fleet of VLCs with a few more coming from the yard soon. See also Boeing. which has just announced a 50% reduction in its building schedule for one of the large jets. It is down almost $34 since the start of the year!