Dow, transport firms not joining market party

NEW YORK -- If there is a downer to the stock market's run to record highs this year it is the inability of two closely watched stock indexes to join the new high party.

The Standard & Poor's 500-stock index has hit new highs. So has the broad Wilshire 5000 and the small-fry Russell 2000.

What hasn't been soaring into stratosphere is the Dow Jones industrial average, home to blue chips Coca-Cola, Walt Disney and General Electric. Also M.I.A. from the new high winner's circle are shares of railroads, airlines and truckers in the Dow Jones Transportation Average. Both stock gauges are falling 1% shy.

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If Wall Street is going to get official confirmation that the market's upward move is sustainable, investors would like to see the industrials and transports break out to record highs as well.

So-called "Dow Theory," which identifies uptrends and downtrends in the market, says an uptrend can only be confirmed when both the stock gauge filled with firms that make things such as soft drinks, heavy machinery and DVDs, and the index made up of companies that move the products via trains, planes and trucks, are hitting new highs at the same time.

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The thinking is that if the producers of goods have to make more goods and the transportation companies have to use more railroad cars and transport planes to move the goods from point to point, it is a sign that the economy is humming on all cylinders.

And that is a bullish sign for stocks.