The Dow Jones Transportation Index rallied Friday to an 8-month high, and produced a technical event referred to as a 'golden cross' in the process.
The Dow transports were last up 112 points, or 2.2%, at 5,099, and have now gained 22% over the past 3 months. The index hit a high of 5,096.82, the highest level seen since Aug. 8.
Separately, the index's 50-day simple moving average came in at 4,751.70 on Friday, crossing above the 200-day simple moving average, which came in at 4,749.80.
Moving averages are used to smooth out daily swings in order to view underlying trends. When a shorter-term moving average, such as the widely viewed 50-day SMA, crosses above a long-term moving average, such as the more-closely watched 200-day SMA, many chart watchers see it as a sign that short- and long-term trends are moving in unison.
The last time the 2 moving averages crossed each other was on Sept. 20, when the 50-day fell below the 200-day. The index closed at 4,814.39 on that day, and fell another 16% before bottoming out at 4,032.88 in intraday trading on Jan. 22.
The last upside crossover was Nov. 15, 2006, when it closed at 4,830.43. The index rose another 14% before topping at an all-time high of 5,487.05 in intraday trading on July 18, 2007.
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