In brief, the theory posits that when the Dow Jones Transportation Index diverges from the Dow Jones Industrial Index, it is a negative sign for future stock market returns.
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In fact, several directors of blue chips had been selling since the index reached 11, 000, a sign that the market might have gotten too far ahead of itself.
When you perform certain gestures with your hand--such as touching your thumb to your index finger in the "okay" sign--there are electrical signals associated with that gesture that pass through the nerves in your upper arm as they carry commands from your brain to your hand.
Another troubling sign was the breakdown of the Russell 2000 index ETF (IWM) from its upper channel late last week.
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This is highlighted by the divergence between reported home sales (rising) and the mortgage application index (still close to its lowest levels, no sign of a rebound).
One last hopeful sign: The Bloomberg U.S. Truckload Trucking Index, consisting of companies like Heartland Express, Knight Transportation and Swift Transportation is up 12% since hitting 52-week lows on reports of rising rates.
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But now, Hussman notes in his latest market commentary that the ECRI Weekly Leading Index, which has been a leading indicator for the ISM index, has declined to -6.9%, a bad sign.
Volume has been light in the up-move and yesterday the index rallied late to post a marginal gain, but today is the first sign of some real anxiety across the pond.
In another sign the market was in a defensive mode, the Dow Jones Utility Index was the only major barometer to move higher, gaining 3.07 points to 433.44.
The closely watched ZEW index fell from 48.5 points to 36.3 in April in a sign of growing investor fears over the strength of the German recovery amid widespread debt problems in Europe.
Although traders appeared to have been dismayed over the jobs numbers on Friday, they seemed to interpret the ISM Non-Manufacturing Index (an index that provides a look at the state of the services sector) as a relatively upbeat sign.
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