The Dow Jones Transportation Average tumbled 1.5% in morning trade Thursday, with 19 of its 20 components trading lower, bucking the 137-point, or 0.5%, rally in the Dow Jones Industrial Average , amid sharp declines in airline and railroad stocks. That adds to the Dow transports 1.4% tumble on Wednesday, which also came despite a 41-point, or 0.2%, advance in the Dow industrials. The last time the Dow transports fell at least 1% in back-to-back sessions while the Dow industrials rose for both sessions was in April 2007, or a little less than 6-months before the October 2007 bull market peak. Back then, the Dow transports fell 1.29% on April 26, 2007 and dropped 1.04% on April 27, while the Dow industrials gained 0.1% on both days. The century-old Dow Theory of market analysis suggests that the Dow transports and the Dow industrials need to trend in the same direction for a long-term trend to have staying power. The idea being, if transportation companies aren’t delivering what industrial companies are making, it could warn of economic weakness.
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