Tomorrow marks the 95th anniversary of Black Tuesday when the Dow fell over 12% in a single day as the US economy transitioned from the Roaring 20s to the Great Depression. The Dow closed at 230.07 on 10/29/1929, but today it’s trading 185 times higher.As we say so often, when it comes to the stock market, you can have no better friend than time.
The Dow most recently closed at a record high on 10/18, and in the ten days since then, it has seen a modest pullback of less than 2%.The Dow Transports index, however, has followed a much different path.While it is also close to its all-time high (less than 5%), as shown in the chart below, its record high was nearly three years ago on 11/2/21. Since the Transports last closed at a high, the Dow Industrials rallied nearly 18% and notched 53 record closing highs along the way. We hope there weren’t any Dow theorists out there holding their breath waiting for the Transports to confirm all those new highs for Industrials!
The fact that the Dow Industrials has had 53 record highs since the last closing high in the Transports is extremely uncommon. The chart below shows the number of closing highs in the Dow Industrials between closing highs in the Transports. In other words, it shows a rolling total of new highs in the Dow Industrials and resets each time the Dow Transports close at a record high.
Since the peak right before Black Tuesday in 1929, only two other periods saw more closing highs in the Dow Industrials between closing highs in the Transports. The highest number of highs occurred between the mid-1950s to mid-1960s. Back then, the Dow Industrials was the first to take out its 1929 high in late 1954, but it wasn’t for nearly 10 more years and 192 new highs in the Industrials that the Transports took out its high.After that, from the late summer of 1989 through early 1993, the Dow Industrials closed at 54 record closing highs between highs in the Transports.That means that unless the Transports rally 4.5% before the Industrials can gain 2%, the current period will at least tie the period of the early 1990s for the most closing highs in the Industrials between new highs in the Transports.
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