A recent rotation out of technology stocks led the Dow Jones Industrial Average to new highs last week, and a classic investing theory on Wall Street is pointing to even more of that in the new year. According to the Dow Theory – which was developed by Charles Dow more than a century ago – a bull market is only confirmed when the 30-stock Dow as well as the Dow Jones Transportation Average score fresh records at the same time. Both indexes are positive on the month, with the former rising more than 1% and the latter gaining nearly 5%. .DJT mountain 2025-12-01 Dow Jones Transportation Average since Dec. 1 The index of transportation stocks – whose performance is typically used to assess the U.S. economic picture – broke out to the upside this month, signaling a "head-and-shoulders bottom" has taken hold, according to Bank of America's Paul Ciana. That means the index should see record highs in 2026 and that the latest trend in the market may have more fuel in the tank, he said. Indeed, the Dow Transports notched a fresh record late last week. "Should the Transportation Average reach a new high while the Dow Jones continues trending upward, price action will be confirming a primary uptrend," the technical strategist said in a Monday note. "Given the constituents of the index, a rotation in sector leadership and an improvement in market breadth may then be underway, a much needed improvement." The strategist added that strong volume occurring alongside higher prices would substantiate the uptrend in stocks. He noted that the 12-week rolling average of the Dow's volume has been increasing since August. For the Dow's transportation index, this year's volumes have exceeded those of previous years. "If prices break to new all-time highs, confirmation would be strongest if weekly volume surpasses the 12-week moving averages on the week of the breakout," Ciana said.
