Thread: Dow Theory

While the world focuses on Tiger Woods, and other absolutely moot political topics, the market continues marching on without them. Let there be no doubt- this uptrend is still intact.

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Uptrend is still intact indeed, but Transports look to be struggling here and Industrials still defy gravity. I see a big move up or a good correction down any day now based off internals and simple MACD. A big move up would, in my opinion, be the blow off top all bulls seem fearful of missing while a correction would most likely be the final buying opportunity before this cycle peaks. Either way, I hate to say it, the 'waiting for a dip to buy' folks won't buy and the 'waiting for a blow off top to sell' crowd won't sell. Let's be honest here.

I can see this market being propped up a bit longer with new money coming in for Roth IRA contributions and the tax refund season. However, there has been major distribution in this market over the past 2-4 weeks. If you're playing around for that maniacal, upward blowoff top that investment fantasies are made of, just be sure to hit the sell button before getting too caught up in it if it does arrive. Unfortunately, most blow off tops are recognizable in hindsight only since the news will support the move in it's entirety.

As far as Dow Theory is concerned, my words are mere speculation on my part. Dow Theory remains in an uptrend, and pullbacks should be bought until a trend change takes effect.

Originally Posted by Bullitt

Uptrend is still intact indeed, but Transports look to be struggling here and Industrials still defy gravity. I see a big move up or a good correction down any day now based off internals and simple MACD. A big move up would, in my opinion, be the blow off top all bulls seem fearful of missing while a correction would most likely be the final buying opportunity before this cycle peaks. Either way, I hate to say it, the 'waiting for a dip to buy' folks won't buy and the 'waiting for a blow off top to sell' crowd won't sell. Let's be honest here.

I can see this market being propped up a bit longer with new money coming in for Roth IRA contributions and the tax refund season. However, there has been major distribution in this market over the past 2-4 weeks. If you're playing around for that maniacal, upward blowoff top that investment fantasies are made of, just be sure to hit the sell button before getting too caught up in it if it does arrive. Unfortunately, most blow off tops are recognizable in hindsight only since the news will support the move in it's entirety.

As far as Dow Theory is concerned, my words are mere speculation on my part. Dow Theory remains in an uptrend, and pullbacks should be bought until a trend change takes effect.

Good post Bullitt it sums up the reality of this market. My vote still resides with a correction after earnings are over. Perhaps another March bottom?

Market warnings have been abound for at least two weeks now and finally the internals are catching up to the Indexes. Dow Theory doesn't care about moving averages but I kept the 50DMA in there for two reasons. 1. Dip buyers just got hammered today and 2. If you're a bull, you can't be happy about the way the Transports cut thru the 50DMA like a knife slicing warm butter.

Take heed to the bearish divergence!

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Yep, let there be no doubt, the uptrend relentlessly charges higher as more and more bulls climb 'over the top' when they hear the Monday market whistle.

Another buy signal was generated the week of April 12-16. Not a buying opportunity signal, but a confirmation of the trend nonetheless.

It's been a while.

Like I've said before, there are many interpretations of Dow Theory with the only one right being the one we call in hindsight. Right now, I'm calling the July lows in DJIA and TRAN as the line to watch.

DT doesn't care about technical analysis but it seems to give warnings prior to DT signals when done with basic indicators. I can't help but to notice a few things.

1. Big H&S pattern in both DJIA and TRAN from Dec2009 until now.
2. Smaller H&S pattern in both from June 2010 until now.
3. Looks like the right shoulder in the smaller H&S patterns are rolling over. Selling pressure at 200DMA line.

However, DT works best when one does not front run signals. When we get closer to the signal, I expect media attention like that of the Hindenburg Omen.

Dow Theory Update
By Tim W Wood CPA09/21/2011

http://www.financialsense.com/contri...-theory-update