Dow Theory gives warning signal…again

Traders work on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange.

The underperformance of the Dow Transportation Average this year may be the reason why the overall market remains range-bound and why it may pull back, some market watchers believe.

As CNBC Pro highlighted earlier this year, Transports have been sending a warning signal for stocks , which have been trapped below the same level since February.

So far in 2015, the Dow Transportation Average is down 6 percent compared with an increase of 2 percent for the Dow Industrials, a rise of 3 percent for the S&P 500 and a gain of 6 percent for the Nasdaq Composite.

That divergence, to some investors, may be canary in a coal mine for a potential significant decline ahead.

"Something isn't right with the Dow Jones Transportation Average," says Carter Worth, head of technical analysis at Cornerstone Macro.