Chart of the Day

Here's an old-school-thinking chart (that we've been updating for many years) that illustrates the utter lack of breadth of the last few year advance in the US major large cap equity indices...  I.e., small cap and transportation stocks are essentially flat since late-2021, while the Dow and the S&P have gained notably... As you trace it back you can see how such set ups don't often end well.

The top panel features the SP500 and the Dow, the middle panel US small cap stocks, the bottom panel US transportation stocks:"

Old school:  Charles Dow believed that for a bullish market trend to be valid, both the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) had to be moving in the same direction and confirming each other. His logic was rooted in the real-world flow of goods:

Industrials (producers) make the goods.

Transports (railroads, later airlines/trucking) move the goods.

If companies are producing more, they’ll need to ship more. So if industrial stocks are rising, but transportation stocks are falling, that signals a possible disconnect—maybe production is up, but not demand or distribution.