"This index encompasses rail and truck freight shipping, UPS and Fed Ex, and other goods transportation companies. It directly reflects the relative amount of consumer spending and industrial activity in the U.S. economy. Year-to-date this index has diverged by a significant amount vs. the Dow and the S&P 500. This stock sector is telling us that the U.S. economy is tanking."
I made a couple annotations to the chart that I'd like to point out. First, the index experienced the dreaded death cross back in May. This occurs when the 50 day moving average crosses below the 200 day moving average and it suggests sellers are overwhelming buyers on the longer-term timeline. Second, momentum indicators are awful, having made a series of lower highs since peaking last December. Lastly, I've drawn what I expect to be the next significant levels of support. You can see that the first area is a full 4% below last night's close. Based on the chart, it's almost a certainty that we'll re-test the 7750 lows from last October. Beyond that, I see 7000 as the next logical support level. Not only is it a nice round number, but it also corresponds with the lows from early 2014.
So to sum things up, it's not looking good for the Dow Jones Transports and, by extension, the US economy. Trade accordingly.