The bull market's fate now rests on just 20 stocks.

I am referring to the 20 stocks that make up the Dow Jones Transportation Average. At least according to some interpretations of the venerable Dow Theory -- the oldest stock market timing system that is in widespread use today -- the bull market will not be considered alive and well until this average rises above its previous all-time high.

And that's asking a lot, since the Dow Transports are 12% below that level.

Why would Dow Theorists believe that the fate of the market rests in the hands of just 20 stocks? Therein lies a long story that I told three weeks ago and will not repeat here. But, in a nutshell, Dow Theorists focus on the behavior of both the Dow Transports and its better-known sister average, the Dow Jones Industrial Average. Bull markets are considered alive and well when both of these averages are jointly hitting new highs.

Three weeks ago these averages had their work cut out for them, since both were far below their April highs. But it turns that just the Dow Industrials were up to the challenge; while last week they rose to a new intra-day record, the Dow Transports remain far behind.

If anything, in fact, they are getting even further behind. On Monday of this week, when the Dow Industrials rose slightly, the Dow Transports dropped another 155 points, or 1.5%.

To show how unusual it is for there to be such a wide divergence between these two Dow averages, I examined all occasions since the late 1800s in which the Dow Industrials were at a new all-time high and the Dow Transports were lagging by at least as much as they are now. If we count as one all such occasions that occur within a three-month period, there have been just 30 since 1900. That's once every four years or so, on average.

Ominously, many (though not all) of those occasions presaged major bear markets.

Perhaps the most spectacular in recent memory came at the top of the Internet bubble in early 2000. On the day in which the Dow Industrials hit their all-time high that year, the Dow Transports were more than 23% below their previous high (set the previous May). That was a huge divergence, and we all know what happened next.

A less spectacular divergence, but still quite noteworthy, came when the Dow Industrials hit their bull market high in October 2007, right before the start of the Financial Crisis-induced bear market. The Dow Transports on that day were 8.4% below their all-time high set three months prior in July 2007.

A couple of qualifications are in order. First, the hurdle the Dow Transports must jump over to confirm a bull market might not be as formidable as I have mentioned here. According to some of the Dow Theorists I monitor, that hurdle might be the high the Dow Transports hit in April -- relative to which this average today is "just" 8.1% below. That's still a high hurdle, but not quite as formidable.

A second qualification: Not all divergences between the Industrials and the Transports over the past century led to bear markets. But, according to my PC's statistical software, the greater the magnitude by which the Dow Transports lagged the Dow Industrials, the worse the market's subsequent performance, on average.

In any case, you might wonder why the Dow Transports are lagging the broader market by so much. Dow Theorists tend not to speculate on such questions, on the theory that the market averages reflect all available information and it is dangerous to assume we have some special or privileged insight.

Nonetheless, one wonders if the Transports are especially sensitive to the prospect of an escalating trade war.

Regardless, the performance of the Dow Transports bears close watching, even if you do not subscribe to the Dow Theory. It is hard to imagine a healthy economy in which the transportation sector does not participate.