Sevens Report Flags ‘Bull Trap’ in Stocks Under Dow Theory
Transports’ weakness signals risk despite record highs
Charles Dow would describe this market as a ’bull trap’ says this analyst
The Sevens Report warned Friday that the U.S. stock rally fits the definition of a “bull trap” under Dow Theory. While the Dow Industrials have hit new highs, the Dow Transports remain negative year-to-date, flashing a bearish divergence.
The note cited two key principles: Confirmation and Trend Reversals. Both indexes must rise together to confirm expansion, but transports’ weakness suggests pressure in travel, logistics, and freight.
Sevens emphasized that despite four of five major equity benchmarks hitting records, Dow Theory would still label the advance a technical bull trap.
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