DJIA hits record, transports lag 4%, every crash since 1929 began this way. The stock market bus might be headed for a cliff

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Dow Theory Crash Indicator: Every single major crash over the last 100 years had the exact same setup: DJIA hit a new high, but the transports failed to do the same (1929, 1937, 1966-1975, 1987, 2000, 2007, 2020). And when transports fail to confirm the DJIA high, the wheels come off the equity bus and the indexes veer off the highway and Thelma & Louise it off the nearest cliff.

Why do I mention this? Well, low and behold, you’ll see the chart shows that’s it’s precisely where we are today…DJIA hit another ATH this past Friday, but transports have failed to reach their own new high, after last setting one in February. Transports currently sit 4% below that mark.

The moral of the story: Bulls with net long equity positions are very likely picking up pennies in front of a freight train barreling down the tracks. Do you feel lucky? (Spoiler: Your answer is no)

Not advice, I eat crayons

Yield curve un-inversion flashes market crash warning, big money moves to safety.

OK, now it appears that the move to safety might be happening.

Once the 30 year hit 5%, yields have pulled back somewhat.

The U-shaped curve isn’t normal but the Fed, in pulling down the short end of the curve next week, will correct that to great degree. The short end of the curve is the only area where the Fed actually has interest rate control.

UN-inversion of the yield curve happened immediately before the last two significant market downturns: 2000 and 2008.

I’m not saying that this will line up with that precisely, because we didn’t deal with tariffs or some of the geopolitical stuff that we are now. But history rhymes, if nothing else.

I’m 95% sure they will cut because jobs have deteriorated significantly now.

Also of note: next week, the Bureau of Labor Statistics is going to release its final jobs revisions for all of last fiscal year. Many analysts estimate that as many as 2 million jobs bragged about by politicians last year never existed and will be wiped out. This will send the stock market reeling, if even remotely true.

If history is our guide, this may well be the big money starting to quietly position itself ahead of a pullback in equities.

Big money is quietly shifting to safety, anticipating shocks that could hit stocks, bonds, and credit markets simultaneously. Combine this with potential job revisions wiping millions from the books, and the stage is set for a liquidity crunch that could ripple through every sector. Bulls may feel secure now, but the underlying signals point to a storm that is already forming, and once it hits, few will be prepared to withstand it.