Everyone keeps wondering when this Teflon market is finally going to crack.
Here’s one chart, via Doug Kass, that more and more people are paying attention to.
It’s the S&P 500 (red line) vs. the ratio of the Dow Transports vs. the S&P 500 (blue line).
The idea among some “Dow Theorists” is that when the Transports get very weak (relatively) it’s a sign that the market as a whole is doomed to fall.
It is pretty stark the gap that’s opened up this year. At a minimum it at least shows that some parts of the market are getting roughed up by the rise in oil prices.