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A century-old stock market indicator is flashing warning signs, signaling warning warnings to investors in the near term. I'm Jared Blickre, host of Stocks and Translation. Let's talk about Dow theory. Uh, we all know Charles Dow, right? He lives in the 1800s and 1900s, lent his name to the indices that we talk about. Uh, not just the Dow Jones Industrial average, but also the transportation average or just the transports. And he used them together to kind of figure out the market trends. Kind of a confirmation. So, let's take a look at Dow theory and we'll and we'll define it here. Developed by Charles Dow in the late 1800s, it gauges stock market trends by seeking confirmation between the Dow Industrials and the Dow Transportation averages. So, that's the confirmation. And I thought it was important to highlight a different term, which is kind of the opposite of that, it's called divergence. Divergence occurs when two related markets or assets which typically move together start to behave differently. So, let's take a look at the Dow Jones Industrial average and the transports over a long period of time. This goes back to the mid 80s and we have both the transports and the Industrials up here. You probably can't tell them apart, and that's fine, because the point of this is to show that they closely track each other over time. Now, down here, I have the one-year trailing performance of the Industrials minus the transports. So, when the oscillator is above zero, that's the Industrials outperforming. And you can see this happens for long periods of time. For instance, here's the .com bubble boom and bust into the Global Financial Crisis. That was a period when the Industrials led for years at a time. Early in the pandemic, we had transports. And the theory behind Dow theory is that you want to see strength or weakness if you're looking for a weakness if you're a bear, but you want to see strength in the Industrials. That's the companies that make things, as well as the companies that ship things, and that would be the transports. So, this is a long-term view, and I thought we'd take a look at a shorter-term view so we can see what's been happening with the Industrials versus the transports recently. This is a six-month chart and this goes back to, uh, fourth quarter of last year thereabouts. And we had the transports peaking. In other words, this was a record high in late November for the transports. What they did from there, they came down, not shown is a 200-day moving average. They bounced off of it, came down, but they finally broke that in late February and we're really leading to the downside. Now, Industrials on the other hand, and I'll take care of these annotations, the Industrials peaked a little bit afterwards. They peaked in early December, and they didn't sell off as much, and they also rebounded more. And in this latest sell-off, they have not sold off as much as a transport. So, on a relative basis, we have seen the Industrials outperforming. Now, we happen to be in the midst of a two-day rally. So, I thought we'd show what's happening in this rally. And so far the Industrials are up 2% versus the Dow transports 1.71%. It would be ridiculous to read too much into this, but if we do have a rebound from current levels, I would want to see these two kind of confirm each other. It might be nice to see the Dow transports play a game of ketchup. In other words, lead for a little bit. So, I thought we'd close here by showing some of the companies that we have in each of the indices, and I'll show you the year-to-date performance. These are the Industrials. This is year to date indeed. And you can see a lot of the mega caps, as we've been telling the story, have been under pressure this year. While there's a little bit more green on this side and some of these smaller names. Now here are the transports, and you can see the biggest is Uber there. We also have a railroad UNP down there. Uber up 22%, probably don't talk about that enough. Uh, but there's a lot more red in here, and that just kind of illustrates the pervasive weakness that we've seen in the transports year-to-date. So, wrapping it all up, I want to see the transports outperform a little bit if we do get this bounce and make sure you tune into Stocks and Translation for more jargon-busting deep dives. New episodes on Tuesdays and Thursdays on Yahoo Finance's website, or wherever you find your podcasts.