Dow Theorists Watch The Transports

The choppy-to-weak trade resumed today, as the large-cap indices continued to see selling pressure. The Dow Jones Industrial Average ($

) finished the day down 106 points or ~.58 percent. This is about 70 points higher than its worst levels today. The Dow Transports ($

) continue to trade very weak, adding more pressure than relief. If this weakness continues, i.e. the $IYT breaks its 50-day moving average, we could see further pressure to the downside, affecting the Blue Chip Index ($

) as well. If we don't see that both these averages bounce and make new highs together, this would be a big divergence and a violation of the Dow Theory that clearly states that both these markets need to hit new highs to confirm an uptrend. If the Dow Jones ($

) or the Transports ($

) can hold their 50-day moving averages, I would consider this a natural pullback. If they break these levels you could see selling ramp up. One note, Utilities ($

) have been pretty beat up as of late. If the Dow gets anymore selling pressure, Utilities could get a bid to the upside. Vlad Karpel and fellow experts discuss the week's economic events that have the potential to move the stock market. This week: ADP Employment ($

), Claims ($

), and Natural Gas ($

) Inventories on tap. Check out the video below: