I learned me something new today ... I've been doing this Dow/Trans thing wrong (well, sort of). It's not enough for arbitrary divergence to exist between the indexes -each must establish an intermediate low or high that is clearly under or above the prior intermediate trend stopped. Then a trend reversal can be seriously considered.
So, today's closing intermediate high on the Dow Jones, which was not confirmed by the Transportation Average is (I'll say 'perhaps') a warning. This is the first real divergence since this intermediate uptrend began on Oct 3rd. Although it's not extreme divergence (a more telling sign - as per July '11), its still significant because we're dealing with clear intermediate highs.
To play the other side, perhaps the only way this rally doesn't break down is if the trans catches up tomorrow and breaks a new high of its own.
Learning this stuff is both frustrating and fun ... today, it was more frustrating than anything.
We'll see what tomorrow brings ...
