Transports Are Leading This Tape Lower

In my work I've found that more often than not the transportation stocks (I use the Nasdaq Transportation index, TRAN) have a leading function.  

Now this is nothing new as any Dow theorist would tell you, but let me show you a chart below of how the TRAN currently looks and what clues it gave us that an equity sell-off was coming:

The chart below doesn't show it, but look at a multi-year chart of TRAN and you will see meaningful resistance from back in 2008 around $2590.  

Next, the chart below nicely depicts how the index did not (unlike the S&P500) make a new high this week.  In fact, TRAN retraced 61.8% of the sell-off from Jan 18-25 and from there (this morning) is failing miserably to the downside.  

I am short via the IYT with a first target just shy of $90.  Keep this index on the radar.

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