The Dow Jones Transportation Average surged 2.1% in morning trade Monday to break out of a resistance level that capped the index’s gains for the past eight months. That bodes well for the broader stock market, said Oppenheimer technical analyst Ari Wald, who wrote in a note to clients that “transports are a bullish tell.” Five previous rallies above 8,000 all peaked and pulled back before exceeding resistance at the 8,050 to 8,150 range. On Monday, the index was headed for the highest close since Nov. 20, 2015. Meanwhile, the Dow Jones Industrial Average was up 308 points at 18,195, but still well below its Aug. 15 closing high of 18,636.05. “In terms of market leadership, we’re encouraged about the relative resiliency in the Dow Jones Transportation Average because we view it as the’right’ leadership and another piece of evidence that points to buyable weakness,” Wald wrote. He said the 2012 election period was also characterized by broader market weakness and outperformance by the Dow transports, and eventually led to a resumption of broader market strength.
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