Some may remember that I was using the Dow Transportation index as a leading indicator last July for where the market may go. The $TRAN broke to a new 52-week high and if it had held my expectation was that the rest of the market would follow. What it did instead was immediately break down and led the correction downward. It was an early warning that the market advance was over. It has corrected 25.3%, more than the general market. Yesterday the $TRAN showed greater strength than the market. This may be nothing more than a bounce play however the situation bears watching. I will take notice if the transports continue to show strength. IYT is the most liquid ETF that tracks the index. My eSignal service reports volume on the index. The attached image shows a generally constructive Large Player Effective Volume picture for the transports. The green line is LEV. I also note that the index generated a pocket pivot buy point yesterday. The green diamond shape above the volume bar shows the automatically generated pocket pivot signal. I don't always follow the transport index, I generally look for what ever index is leading and use that as a guide for the rest of the market. I think the transports may still be in the leading mode.
Yesterday UAN broke out of a 7-week cup with no handle base. UAN is a recent IPO in the fertilizer space. It closed 1% above the pivot point yesterday. CF and TNH, in the same industry group have ideal price and volume action and are good examples of what is leading the market at the moment.

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