A Look At The Dow Jones Transportation Average Index!

Dow Theory

Since many are starting to talk about the “DOW theory”, I decided to look at the DJT index to see what has happened. In short the present bearish phase is not different than the DJIA I have been using. A recent correction in the DJT has also taken place at the same time as all other markets have been doing. So this just confirms, that the DOW theory may not be any help at all.

All my trend lines are based on the angle of the top trend line, with the middle line helping to determine the trend of at least one lower degree. At a minimum, we would enter Intermediate degree wave patterns when we get to the center line. At the 2000 price level, we have a huge base that would present  an extremely bullish setup in the future.  Any Cycle degree correction would have to slice through the bottom trend line, as all general markets I cover can go below 2011 bull market lows.

I’m not going to update the DJT on a regular basis, but it is another Index we can watch, to help determine the next big bearish bottom.

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DJT, Dow Jones Transportation Average (INDEX) Review

I haven’t looked at the Dow Jones Transportation Average (DJT) for a long time, but over the years I have collected many different stages of the DJT. I made up a simple version closer to an impulse wave count, but accidentally erased it. I did manage to get one print out, so it was not all lost. Many times I also create a hand drawn version, which I scan into my computer. I’m a firm believer that Elliott Wave analysis cannot be done strictly inside our computers, but must be done by hand on a printout. Printing out a weekly chart allows you banish all mistakes, at least in the short term, and you can stare at the chart for weeks looking for a better fit. 

Of course, if we just use the EWP for short term trading, it matters little what degree levels we are actually on.  

Any kid can draw numbers and letters on a chart, but every number and letter in the EWP,  has forecasting abilities built into them. The forecasting  is much harder to decipher than simply drawing mindless numbers and letters. With about 15 degree levels, 5 numbers and 5 letters, keeping any wave count in a sequence should be our top priority.

This DJT is nothing like the other 4 indices, due to the fact there are some crazy patterns that fit much better into a diagonal. 

I started with waves 3-4-5 in Intermediate degree, (Red) and then a wave 3-4-5 in Primary degree, (Black). I believe that Cycle degree wave 3-4-5 will follow, which may take us to the 2029 time period. I couldn’t fit a Cycle degree into this chart at this time, but it will be Magenta once I do get the space. 

The 2009 to 2017 bull market can also fit very well into a single zigzag rally,  just like the bull market from the 2003 bottom to the 2007 peak. A small expanded peak in 2007 works for me, followed by the crash down into  the early 2009 bottom.

At the 2000 price level the DJT  has created a double base with two sets of 4th wave bottoms.  Another 4th wave bear market in our future, should produce our third set of 4th wave bottoms, which should be in Cycle degree.  When we count each 4th wave bottom, then each 4th wave must increase by one degree as well. If by design, a wave analyst is looking for a SC degree 4th wave bottom, then he has skipped ahead or travelled in time by two degree levels already. At this point the links in a sequence will be broken, sending us off chasing some wild degree level that may not be due for another 13 years or more.

From my perspective a base like this has huge implications for the future. Some analysts forecast a huge depression where stocks can fall back to the 70s. The DJT would have to disappear off the chart if that were to happen. The DJT is not going to zero no matter what all those little numbers and letters tell us.

There is no way I can include the DJT as regular postings, but the wave count would take until 2020-2021 just to confirm if Cycle degree wave 4 is real. 

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