
While it’s still very early on in Q2 earning’s season, the transports have been releasing their financials and while yesterday there was a rally of around 2%, today was another story as additional transports reported. Today, the Dow Jones Transports saw a decline of 390 points or 3.60%. The Kapital News has been discussing the Dow theory for quite awhile and our analysis has shown that over an 18-month period, the divergence between the S&P 500 and the DJT has never been this wide nor spanned such a duration. If the Dow theory is to hold, that is to say that it’s a leading indicator, then one would expect the S&P 500 to correct in the near-term. However, we remain in the financial world of Oz with central bankers standing at the helm ready to cut interest rates and even inject further liquidity into the financial system – therefore, anything is possible. Yet, history has shown that interest rate cuts are not a panacea and diminishing marginal returns will take root. Stay informed, stay diversified, and stick with The Kapital News.