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After the QE3 'Sugar Cube,' SPX Declines

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Also, sectors decouple: Witness the Dow Jones Transportation Average and the Dow Jones Industrial Average.

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I have commented that I think much of the weakness is attributable to the railroad stocks, which have been affected by the weather. First, it was the drought that hampered grain shipments; and then it was Hurricane Isaac. The "rails" have roughly 23% of their revenues tied to coal and grain shipments, so ex-coal and grain volumes are up around 2% quarter to date. The airlines have also come under pressure as fuel prices have risen. Regrettably, it is going to take a little longer before we see if the transports' weakness is a one-off thing, or a more meaningful event.

Interestingly, Mark Hulbert concludes:

But here was where the real shocker came in: The correlations that I did discover for the Dow transports were inverse. In other words, the stock market over the last three-plus decades tended to perform better following periods in which the transports were weak rather than strong.

Of course, this industrials and transports discussion leads to thoughts about Dow Theory. Therefore, it would not surprise me to see the transports break below their June 4 closing low of 4847.73 while the Dow stays above its June 4 closing low of 12101.46. That would represent a downside non-confirmation and should result in a re-rally for the equity markets. For the record, to render a Dow Theory "sell signal," at least by my method, would require both averages to close below their respective June 4 closing lows.
No positions in stocks mentioned.
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