There was an important development this week in the stock markets that few picked up on. This week the Transportation Averaged closed at a new all time high confirming the bull market is still alive. For the last 7 months or so the Transportation Average has been building out an expanding triangle trading range. The price action still hasn’t broken out above the top rail yet, but if it does I would view the expanding triangle as a halfway pattern to the upside. Keep in mind you have to have a consolidation pattern to get an impulse move as you can see from all the other consolidation patterns starting at the last reversal point.

As you can see on this weekly chart the Transportation Average is a good producer of some really nice chart patterns as shown by all the blue formations. The H&S bottom was also very symmetrical as shown by the neckline symmetry line. Durning the strong move up back in 2013 and 2014 the Transportation Average formed 2 bullish rising wedges which told us that the bull market was very strong. When that leg of the bull market ended in early 2015 the Transportation average built out the 5 point bearish falling wedge reversal pattern.

The 20 year monthly chart shows a massive symmetrical H&S bottom which launched our current bull market with the head forming at the 2009 crash low. I’ve shown you many times that when there is overhead resistance many times you’ll see a consolidation pattern form just below that important resistance zone. Note the red triangle that formed just below the neckline which led to the breakout and the strong impulse move up.

Below is a 100 year quarterly chart which puts the 2009 H&S consolidation pattern in perspective. After 100 years of trading the Transportation Average is trading at the highest level in history which is confirming the bull market in the INDU. Without one you can’t have the other so as long as both are making new all time highs it is what it is until it isn’t. Have a great weekend. All the best…Rambus