The Dow Theory’s significant signal highlights the upside potential of US stocks, as the Dow Jones Transportation Average has achieved a strong nine-day winning streak—a level of momentum seen only five times this century, underscoring the rarity and strength of the trend. The index has now successfully broken through a key resistance level that had repeatedly capped gains earlier this year, further solidifying the validity of the breakout.

Michael Kantrowitz, Chief Investment Strategist at Piper Sandler, emphasized that regardless of the core driving factors behind the transportation stocks’ breakout, it sends a clear bullish signal for the broader US market. He noted that transportation stocks outperforming the broader market is a core sign of an expanding market rally. Over the past three years, during a cycle of economic divergence, the transportation sector has long underperformed, making the current breakout even more significant as a potential turning point in the trend.