Two leadership groups are already at all-time highs.
Here’s the chart:
Let's break down what the chart shows:
The left chart displays the Dow Jones Transportation Average in blue and the Dow Jones Industrial Average in black.
The right chart displays a Semiconductor index in blue and the S&P 500 in black.
The Takeaway: Transports and Semiconductors have both cleared prior peaks while the broader indexes are still below theirs.
This is how Dow Theory works. One move on its own isn’t enough. If the trend is real, other parts of the market should be moving in the same direction. Leadership can break out first, but you need the rest of the market to back it up before you trust it. Until that happens, the signal isn’t complete.
Right now, Transports are leading Industrials, and Semiconductors are leading the S&P 500. That tells you where the buying is showing up. The market is not short on bulls. It is just waiting on confirmation now.
Industrials and the S&P 500 are pushing into those prior highs. Price is sitting right under resistance and buyers are still stepping in.
This is the spot where trends either expand or fail. If this was a weak market, you would see rejection here. Leaders would roll over and the indexes would stall.
Dow Theory has not confirmed the move yet. But it is leaning one way. Leadership is already in place, and the rest of the market is moving higher into the test.
Now it comes down to one thing.
Do the broader indexes confirm, or does this stall here?
Right now, the weight of the evidence points toward confirmation.
