If we venture all the way back in time to the early days of Wall Street when Charles Dow first wrote his Dow Theory, we might recall that Dow wasn't a market technician. Dow wrote it as an economic theory. The thought behind his theory is quite simple: If the companies that are producing the goods are doing well, then the companies that are transporting those goods should be doing well too.

Yet folks never bothered to wonder how it was that the railroads could be doing so well and the companies of the goods they shipped were breaking. Clearly, Thursday, they finally connected the dots.

The fuss over the decline in the transports Thursday was amazing to watch. Yet while everyone scoffed at this group (and there is a lot to scoff at), I didn't see anyone point out that the trannies are now sitting right at support.

Don't get me wrong: I think they are a top that will eventually break even farther down. Heck, I even warned about this chart back in September. But it was as if the decline was all they could see, not the support. Unless the trannies absolutely collapse again Friday, they ought to attempt to rally in the next few days since this is a decent support area.

And what makes me think we're going to rally? Well, by Monday we'll be pretty oversold again. The string of numbers we're dropping on the oscillator, which is the 10-day moving average of the advance/decline, finds us beginning Monday dropping negative readings for seven out of the next nine days. Typically, when we drop a string of negative readings we get an oversold bounce.