New York, NY (PRWEB) October 12, 2012
According to Mitchell Clark, contributor to Profit Confidential, Norfolk Southern recently announced that its third-quarter earnings would be below consensus due to a decrease in coal shipments. Following this announcement, Clark reports that the entire railroad group sold off on the stock market, including Union Pacific, a key component of the Dow Jones Transportation Average, suggesting that the stock market is vulnerable to a major correction.
“Transportation stocks are important to the stock market’s overall trend,” explains Clark.
But he also notes that transportation stocks only do well when the Main Street economy is doing well; the Dow Jones Transportation Average has been flat all year, Clark points out.
“So it figures that the Dow Jones Transportation Average isn’t going up along with the rest of the stock market, because the economy isn’t growing,” the Profit Confidential contributor reasons. “And there lies the truth about the current state of things.”
While the stock market is going up, transportation stocks are not, and this divergence is what makes the stock market look very vulnerable to a major correction, says Clark.
In the article “This Stock Market Index Is Screaming Sell!,” Clark states that this divergence among transportation stocks is a major problem; even though Clark doesn’t think the stock market is overvalued, he argues that it is definitely ahead of the current economic reality.
Clark concludes that the Dow Jones Transportation Average is currently revealing a major sell signal for the rest of the stock market.
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market... before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
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Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.