Helped by strength in trucking, airfreight, and airline stocks, the Dow Transports have rallied within 1% of their February high of 5,368.93. The Dow Industrials are roughly 2.7% from their October high of 13,610.15. With closes in both averages above those levels, the bullish primary trend would be reconfirmed under the Dow Theory.
A near-term failure to break above those levels would be discouraging, as it would set the table for a bear-market signal. Without closes above 13,610.15 in the Industrials and 5,368.93 in the Transports, a breakdown below the respective November lows of 12,542.38 and 4,891.27 would put the Dow Theory in the bearish camp.
For now, we are holding 9% to 11% of equity portfolios in a short-term bond fund as we watch the averages.