Trannies Look Toppy

The Dow Jones Transportation Average has had a spectacular run in the past two months but looks to be nearing the end of the road. 

Bullishness as measured by the Rydex asset flows has reached an all time high, indicating that most traders have already bought into this rally.

Rydex_transports

Source: Sentimentrader

In addition, the index hit a DeMark Sequential (TM) sell signal two weeks ago and has now confirmed a top is in place.   

Tran_weekly_120905

Source: Bloomberg

In addition, many leading transportation stocks have actually not made new highs along with the index, indicating to me that the breadth of the rally wasn’t very deep.  For instance, both FedEx and Southwest Air have hit DeMark sell signals and have stalled at major resistance points.

Fdx_weekly_120905

Luv_weekly_120905

Source: Bloomberg

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