A Tranny Breakdown in the Making

With Fedex (FDX) down 2% on what the press is calling "tightened" guidance next year, the Dow Transportation average, known affectionately as the 'Trannies" on the street are heading south as well. This chart does not engender confidence not only in the transports, but in the overall market... Let's do a Skippy to Jiff comparison and throw a Dow-30 chart up as well...
As usual, choosier bulls have definitely chosen the Dow lately... but there could be trouble ahead. While the Dow has continued to bop along in its fairly tight upward channel the Trannies started to break down last October and today broke below its 200 day moving average. The head and shoulders pattern in the Dow Transports is unmistakable and for how long the Dow Theory rule can be broken - where the Dow-30 keeps going higher while the transports falter - remains to be seen. In the words of Larry to Curly in warning that he might anger Moe over a scheme about to go badly wrong, "I'd be careful if I was you."