The Dow Jones Industrial Average could pull up from its recent dramatic freefall if the Dow Jones Transportation Average manages to stay above critical support levels, Roelof van den Akker, chartist at ING Wholesale Banking, told CNBC.
“For the very short term yes, it’s weak, it’s gloomy, but looking at the Dow Theory we could have a bullish divergence which could lead to a trend change for the next couple of months,” Akker said.
The much-watched theory for predicting market moves suggests that if the transport index can manage to not follow the industrial average to the downside, it can act as a lifeline.
The Dow Jones Industrial Average already broke its 2002 lows, below 2,750 points, but the Dow Jones Transportation Average remains above its horizontal support level of 2,000 points, Akker points out.
If the two indexes continue to point in different directions, it’s good news for the Dow, at least for a few months, according to Akker.
- Watch the video above to see Akker's views on the Xetra DAX.
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