Dow Transports Selloff Warns Investors To 'watch Out'

MarketWatch Pulse

The Dow Jones Transportation Average fell 0.4% Monday, bucking the rally in the broad market, as the jump in crude oil prices to a seven-week high raised concerns over higher fuel costs. The Dow transports declined for a fourth-straight session, to the lowest level since Oct. 24, 2014, and for the eighth time in 10 sessions. The fact that the Dow transports has hit a new low might concern some followers of the century-old Dow Theory of market analysis, which states that both the Dow transports and the Dow Jones Industrial Average should move in the same direction to confirm a longer-term trend. Meanwhile, the Dow Jones Industrial Average rallied 118 points, or 0.7%, and posted its second-straight gain, and fourth in six sessions. "The underlying fundamentals of the [Dow] theory hold that the industrials make and transports take," according to S&P Dow Jones Indices, which is the caretaker of the Dow averages. "If they diverge -- for example, if the industrial average keeps climbing while the transports decline -- watch out!"

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