On Friday, June 4, 2021, a very interesting divergence between the NASDAQ and the Transportation Index setup which highlights the uncertainty related to the continued global market recovery trade. With the NASDAQ rallying over 200 points and reaching levels near critical resistance, near $13,775, the Transportation Index collapsed over -150 points and briefly tested critical support near $15,350. What would prompt this type of movement in these indexes?
I believe the recovery/reflation trade has already run it’s course and we are starting to move into a complacency phase with regards to future economic activity and output. Consumers are already fairly settled after the past 15+ months of COVID lockdowns. They’ve either adjusted to the new work-at-home requirements or they have relocated into areas that allow them to move forward with their lives without having to expend more capital. For those who were not able to make these moves already, the inflationary impact on consumer prices of homes, commodities, food and other items may keep them from making any big financial decisions as they continue to try to deal with higher costs.
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WHEN DIVORCE HAPPENS: THE NASDAQ & TRANSPORTATION INDEX DIVERGE IN BIG A WAY WHICH CAN SIGNAL A WEAKENING ECONOMY
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