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To: Moonray who wrote (15430)	5/5/1998 3:04:00 PM
From: Mang Cheng	Respond to of 45548

(General Market News :) "INSIGHT- Dow Theory backers spot signs of weakness" NEW YORK, May 5 (Reuters) - The stock market may be headed for some weakness as transport stocks fail to match the new blue chips highs, according to supporters of Dow Theory. The theory states that a major trend in the stock market must be confirmed by similar moves in the Dow Jones Industrial Average (^DJI - news) and in the Dow Jones Transportation Average (^DJT - news). Monday, blue chip Dow industrials gained 45.59 points to close at a record high of 9192.66. But while the Dow transportations closed up 15.77 points at 3501.19, it was well below its record close of 3686.02 on April 16. The Dow transports average has languished since April 20, analysts said. The blue chip advance depended largely on gains in just two stocks, Eastman Kodak Co. (EK - news), and Union Carbide (UK - news) rather than any broad market rally. It's not just the transportations that may be running out of steam, according to analysts. The Nasdaq composite, the Pacific Stock Exchange technology index, and the Russell 2000 index are also finding it more difficult to move higher to confirm blue chip gains, said Peter Green, vice president technical research at Gruntal & Co. The Nasdaq and the Russell 2000 last made record closes on April 22 and April 21, respectively. ''Near-term we are setting up for a Dow Theory negative signal,'' Green said. The Dow industrials could fall back at least to 9000 points, he added. ''It's not a major correction as of yet, because the tops we have seen in the indices are not major tops. We are going to have weakness for the next two-to-six weeks,'' Green said. There is no technical, chart evidence that a major top has been established. Analysts explained that the Dow is now in uncharted record territory. According to Dow Theory, unless both of the averages confirm an upward or downward move, the market will fall back to its former trading range. ''For the new high in the Dow unconfirmed by the transports, that sets up a situation for potential trouble,'' said Richard Russell of Dow Theory Letters. ''The transports are a good indication of sales and moving the merchandise, and they may be discounting a coming slowdown,'' Russell said. The dollar was also turning weaker, and this would in turn put pressure on bonds and ultimately the stock market, Russell added. ''This is what I call a very minor non-confirmation. You don't have the big pullback that you need to set it up for the classic type of Dow Theory,'' said Jonathan Dodd, technical analyst at Morgan Stanley Dean Witter, Dodd said. The Dow would need to fall to about 8470 to qualify for significant pullback from its record highs, Dodd said. ''The one thing is that Dow Theory tends to be late with its signals,'' Dodd added. But the market would see a short-term correction if the Dow industrials fell to 8800 points, or the Standard and Poor's 500 index slid to 1080 points, Dodd said. biz.yahoo.com Mang