Im not convinced that we have broken out yet.The Dow has...

Im not convinced that we have broken out yet.

The Dow has surpassed its previous August closing high of 10698.75, whilst the transports have not and are still off another 40 odd points from a previous high of 4516.35. We therefore have divergence in the averages which constitutes a Dow Theory sell signal.

The downward trendline from the October 2007 peak to the April 2010 peak has still not been breached and actually rejected prices last night.

If the Transports confirm the Dow and the market can close above this significant trendline, a new bull market would be confirmed. Until this occurs, we are still in a bear market.