Chances of Bull 2: The Return of the bull

I don't know why, but I always want to add a second word to "Bull" when I'm talking about the markets :)
Today, we continue tracking the Dow and the Transportation average. I'm still waiting for confirmation from the divergence in the two indexes to signal that a significant rally will develop.

Here's the Bull
As you can see from the following chart, the Dow is extremely close to breaking a 6 month high.

Below the main chart, the MACD indicates that the downside of the cycle might be starting, but does not indicate an oversold level.  The ADX at the very bottom shows an increasing up-trend (in green) but an overall trend strength of less than 20, which translates into "not a trend". This is an ominous that things could go either way. The price action today on the dow has started to move down in the closing hours, however remains up on the day. Above the chart, the RSI does not indicate an oversold level, however it's getting close and we've seen sell offs start here before.

As for now, I'm expecting that the Dow will continue climbing tomorrow (or at least make another new high) as the Trans has closed slightly in the negative today. Short term, this confirms the overall upward trend in the market we're continuing to see. The thing that could change all of that is unexpectedly low earnings which are starting to be released tomorrow. That would be a sort of black swan.

I will be watching tomorrow to see what both the TRAN and the DOW do.

The Bears
Unexpected low earnings are a looming reality, especially for banks.
Both the Dow and the TRAN are still off of their all-time highs. This is important, because the TRAN beat those highs in 2011, but the Dow did not. The significance here is that for the TRAN average to beat it's all-time high, it has to only climb 375 points. It could do that in two days. For the Dow to do the same, it would have to climb 1,605 points. So watching the developing trend here is important. For a recovering market, we want to see the Dow continuously etch higher while the TRAN either declines or trends sideways over the next couple of months.

The likes of this actually happening are not huge, given the huge burden of government and public debt that every western nation is being crushed under. But, we'll let the data speak for itself over time.