10/23/2012 - Stocks get HAMMERED. Did you heed the warnings?

As I said earlier this week, and several times before: here, here, and here, look to be buying when the Dow trades down to around 13,000 as long as the transportation  index isn't hitting new highs or new lows. We are awfully close to this today, and I would start to think about placing some bids, especially since it looks as though the transportation average is not confirming the down trend in the Dow, as will likely close out the day up 30 to 40 points.

One warning: Remember the strength in the transportation average I was telling you about? Well this may be the beginning of that strength. If it is, it will be buoyed by falling oil prices over the past couple of months. That sounds strange, but if companies release positive earnings, you can bet that those earnings will be directly related to the weakness in oil and their ability to capitalize on that. The same may be true for commodity plays like gold and silver miners, as the price of the shiny metals seriously rebounded after bottoming in July - although I may be ahead of myself, and the rebound in metal prices won't actually show up on the books until Q4. So, carefully tred those waters. They are shark infested.

Here's the overall danger - and we should pay CLOSE attention to this.

If the transportation index suddenly surges to new all time highs (or a series of new all time highs), but the Dow Jones doesn't confirm the move by trading down to new intermediate lows below 13,000 ... RUN FOR THE HILLS.

However, if things stay pretty well as they have over the past several months, and the transportation index continues range-bound, not making new highs but also not breaking new lows, and the Dow doesn't break new lows, then the time to buy more aggressively is fast approaching.