It "looks" as if the Dow is going to try pull the transportation average along to greater heights. In the short term, though (the weeks ahead, not necessarily days), expect another sell-off. A lot of the short term analysis I'm reading is starting to turn bullish, but I not so quick to jump on that train (specifically, because I'm not a day trader).
I expect that if the Dow closes any day (or better, the week) above 13279, and the transportation average can't gain the more than 200 points it needs to surpass it's old high of 5360, there will be another sharp downdraft in both indexes.
In the current conditions (the Dow dragging higher while the transportation index lags), it is an opportunity to quietly accumulate positions in high quality stocks and ETFs that get sold off with the volatility inherent in the trend. But if at any time in this cycle the transportations surge ahead to new highs (thus beating old highs of 5360) and the Dow starts lagging (meaning not making new highs above 13279), then we should consider taking profits or even liquidating our speculative long position, and perhaps take some profits on our core holdings. If this becomes the case, bonds will likely continue to do well (counter intuitively, bonds would continue to be the flavor of the day for investors).
Peace,
R
