Transportation Index Creating A Topping Pattern?

by Kimble Charting

This quote comes to mind when I look at the chart above; bottoms are often events and Tops are a process. Could the Dow Jones Transportation be creating a “Topping Pattern” over the past 15-months? Possible!

In this monthly chart of the Transports index, we applied Fibonacci extension levels to the 2003 lows and the 2008 highs at each (1).

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The rally off the 2009 lows saw the Transports index test the  261% extension level as resistance in January of last year, where a strong upward trend stopped on a dime. It has now spent the past 15-months attempting to break above this Fibonacci extension level, which comes into play as resistance.

While testing this resistance level, the Transports could be creating a “Head & Shoulders topping pattern!” 

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The bullish case for stocks would receive quality good news if Transport can take out this resistance zone!  Keep a close eye on the Transport index the next few weeks as they are dealing with what looks to be a very important price level!