Divergence between Dow Transports and S&P500 Is A Big 'Warning Sign'

Everyone keeps wondering when this Teflon market is finally going to crack.

Here's one chart, via Doug Kass, that more and more people are paying attention to.

It's the S&P 500 (red line) vs. the ratio of the Dow Transports vs. the S&P 500 (blue line).

The idea among some "Dow Theorists" is that when the Transports get very weak (relatively) it's a sign that the market as a whole is doomed to fall.

It is pretty stark the gap that's opened up this year. At a minimum it at least shows that some parts of the market are getting roughed up by the rise in oil prices.

Read more: http://www.businessinsider.com/chart-of-the-day-doug-kass-this-divergence-is-a-big-warning-sign-2012-2#ixzz1nPb47SRu