Why haven't the DOW Transports dropped further?greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
The DOW Transports were down today...as expected due to the oil supply and associated cost problems in the NE. If fuel goes up, airline stocks go down. BUT, the transports were down less than 50 points. The NASDAQ was down almost 140...a much higher percentage loss. The NASDAQ shouldn't be that energy sensitive..
Any ideas? Or should we expect to see the Transports drop over the next couple of days...
-- Mad Monk (firstname.lastname@example.org), January 24, 2000
The DOW was down 2.2% while the Transports were down 1.8%.
I wouldn't necessarily say that's a "much higher percentage loss"
Keep in mind, also, that tranports have taken it on the chin over the past 9 months. In april of last year, the tranports hit an all time high of 3783.
Since then, the index is off 28.5%
So, while the market has been (supposedly)going bonkers, here's another reason why those 401(k) statements as of 12/31 aren't looking so rosy. I'm glad I pulled everything out in April. My retirement plan funds didn't beat money market earning from that point through the end of the year.
The better question to ask, then, is:
Why haven't the DOW industrials and NASDAQ dropped further to reflect the same softness that the transports are seeing?
-- Duke1983 (Duke1983@aol.com), January 24, 2000.
It's a bubble, that's why. The DJT is a leading indicatot of a trend change.
-- Ishkabibble (email@example.com), January 24, 2000.
Most airlines have hedged there fuel costs
-- Gambler (firstname.lastname@example.org), January 24, 2000.
1) Good point on airlines hedging fuel costs (through futures contracts, etc.). That's a valid use for the commodities markets...and good financial management by the airlines, if true.
2) I, also, am out of the equity markets in my 401K portfolio. The market is far too volitile for my liking...and for my future security. Rollover may be past us, but there are too many uncertainties right now...and I'm still looking at a massive decline in the relatively short term...for both the DOW Industrials and Nasdaq. Price/Value will eventually come back into line!
-- Mad Monk (email@example.com), January 24, 2000.
The DJT'S are a leading indicator ,precisely because they contain none of the froth that is pulling the other averages.
-- James (firstname.lastname@example.org), January 24, 2000.
James (email@example.com), wrote: "The DJT'S are a leading indicator ,precisely because they contain none of the froth that is pulling the other averages."
Look at the Transports relative to their own all time HIGH from April/May of 1999. They reached 3833 (intraday high) and have been steadily head down since then. Now around 2700 that is a loss of roughly 25%. The fact that they were giving ground continuously while the Dow, S&P and Naz were rallying to all time highs tells the story. They have already giving back FAR more over a longer period. The are a leading indicator as James so rightly points out of the *coming* of a bear. Whether you adhere to Dow theory or not, this has been a key plank in the bear "platform" since the last April/May, even as the rally on the major indexes continued unabated. This along with the continually deteriorating advance/decline ratio and the fact that 25 stocks have accounted for nearly ALL the advance in the S&P are telling symptoms of the end of a bubble. The trick is timing! Also, consider (for those versed in Technical Analysis) that the Trannies are VERY close to major historical price support will struggle to break down through that support. But when/if they do, you have a pretty strong indication of bad news for the rest of the market.
-- Jackson Brown (Jackson_Brown@deja.com), January 24, 2000.