S&P 500 keeps hitting highs, 0DTE volumes surpass 60% of total, but transports lag — real economy might be whispering a warning.

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The S&P 500 keeps climbing to new highs while the transportation index, which tracks trucking, shipping, and freight companies, has started to stall out. That matters because transports are tied directly to the real economy, if goods aren’t moving, demand is slowing, and it usually shows up there first.

In the past, these two have moved more in sync. When transports rise alongside the S&P, it’s a sign the stock market’s strength is backed by actual economic activity. But now, the S&P looks strong mainly because of big tech and heavy index weightings, while transports are flashing weakness. That split tells us the broader economy may be cooling even as stocks look fine on the surface.

There are two ways this could play out, either transports rebound and confirm the S&P’s strength, or the S&P has to come back down to reality. Given everything else we’re seeing like tight credit, rising bankruptcies, slowing freight, it looks more like transports are giving the honest read, and the S&P is running ahead of itself.

Basically, this gap is a warning sign that markets are being held up by liquidity and narrow leadership, while the real economy is showing strain underneath.

https://twitter.com/NorthmanTrader/status/1958600591472828746

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