Constant Currency Dow Transportation Better Represents the 'Real' Economy

Higher stock prices, driven by liquidity (currency devaluation), support the premise of a solid economic recovery. The transportation stocks (transports), like small cap stocks, have always been more sensitive to liquidity. The computer buy programs will chase even harder when the transports push to new highs in the near future. New nominal highs, however, means little in a world driven by currency devaluation. The downward trend in the constant currency transport index provides a better assessment of the 'real', clearly struggling economy.

Dow Jones Transportation Average (DJTA) AND DJTA to Gold Ratio (DJTAGOLDR):