Oh, Have Another One!

I know I am dating myself with Toll Booth Willie references (about thirty years ago at this point).

However, it is worth driving home the point that the transportation stocks, which got many bulls quite giddy as summer approaches regarding pent-up demand for travel and general post-COVID animal spirits, have actually gone in the other direction. 

On the Dow Jones Transportation Average weekly chart, below, we can now see a confirmed head and shoulders top outlined. This also confirms the Dow Industrials' weakness, themselves, reinforcing the notion of a major bull market top not only in place but confirmed. This all dictates lower prices until proven otherwise, meaning the presumption is rallies keep getting sold, regardless of how many times bulls try to talk themselves into declaring major bottoms. Airlines, rails, truckers, are all dealing with higher fuel costs and slowing economic growth. 

Of course, the market is aware of these issues by now. So, the real issue is whether the economic contraction goes much deeper than expected for a hard, not soft, landing.

As for today's tape, bulls are trying to defend last Thursday's lows on the S&P and Nasdaq. That is pretty much our context for the day and possibly into the weekend. Failure to hold about 3,850 on the S&P likely yields panic selling.