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Thread: Dow Theory

  1. #13

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    Default Re: Dow Theory

    "...at that time the existing Primary bearish trend may be trying to change. But, until such time there is simply no evidence, in accordance to classical Dow theory, to support any claim that the Dow theory has turned or is turning bullish at this time." Tim Wood, www.cyclesman.com

    Richard Moroney, author of Dow Theory Forecasts Newsletter, is an avid follower of the Dow Theory. He still recommends that his readers keep 25-30% in cash until the Dow Theory triggers a buy signal. www.dowtheory.com/

    I'll keep you posted....

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  3. #14

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    Default Re: Dow Theory

    The magic number we're looking for here is 12,743. Since the Transports put in a high above February's high, the Industrials need to confirm with a close above it's February 1st closing price. This move would, in theory, confirm a new uptrend in the general market. It would not signal an end to the Bear Market Signal under Dow Theory.

    www.dowtheory.com

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  5. #15

    Default Re: Dow Theory

    Quote Originally Posted by Frixxxx View Post
    I ride a motorcycle for my work transportation. 5 day work week. Prices averaged from my QUICKEN budget.

    2004 I was paying $1.74/g * 5 gallons = $8.70 a week
    2005 ------------ $2.30/g * 5 gallons =$11.50 a week
    2006 ------------ $2.80/g * 5 gallons =$14.00 a week
    2007 ------------ $3.10/g * 5 gallons =$15.50 a week

    This is the only item in my budget that has gone up 200+% since 2004.
    An analyst on CNBC said gas would go to $4 by summer
    100 G
    RSI - Relative Strength Indicator DMA - day moving average

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  7. #16

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    Default Re: Dow Theory

    Quote Originally Posted by Bullitt View Post
    The magic number we're looking for here is 12,743.
    Transports keep storming higher even though the front page news and coffee break talk is usually about how bad the economy is, Allegedly.

    Confirmation of a new bullish uptrend at 12,743 is just within reach...

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  9. #17

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    Default Re: Dow Theory

    Quote Originally Posted by Bullitt View Post
    Confirmation of a new bullish uptrend at 12,743 is just within reach...
    Unless your MO is buying the top and selling the bottom, disregard the headlines and turn off CNBC.

    New Buy Signal under the Dow Theory will be triggered today at the close.

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  11. #18

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    Default Re: Dow Theory

    Depending on who you get your Dow Theory information from, we're either in a pullback from a prior buy signal or we never got a buy signal in the first place! The bullish Dow Theorists claim a retracement to 12300-12400 should be expected and recommend some small cash positions for additional buying on weakness at those levels. The other side says that the Dow Theory never gave a buy signal in April.

    I don't know, somebody's right, somebody's wrong. It's amazing how many different interpretations of a basic theory there can be.


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  13. #19

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    Default Re: Dow Theory

    Nothing much changed in the Dow Theory. Depending on who you read, they are either treating this as a pullback or a major bull trap.

    Most seem to agree that the break of the lows in the Dow caused a non-confirmation of a new bearish trend. In other words, if the Transports break their Jan. lows, the primary downtrend is confirmed, and who knows when it will end.

    Dow theory is not a very difficult concept, but the opinions gyrate from newsletter to newsletter. Here's a list of Dow Theory Newsletters along with their CXO ratings if anyone is interested in any further reading. After a while, you might just end up establishing your own Dow Theory opinion.

    1. Dow Theory Forecasts www.dowtheory.com (Richard Moroney)
    the accuracy of Richard Moroney's stock market forecasts, based on a small sample, is just above average. Confidence in this conclusion is low.

    2. Cyclesman www.cyclesman.com (Tim Wood)
    Tim Wood's stock market forecasting accuracy since April 2003, generally focused on a long-term bull-versus-bear contest, is somewhat below average. Confidence in this conclusion is fairly high.

    3. Dow Theory Letters www.dowtheoryletters.com (Richard Russell)
    Richard Russell is well below average in predicting stock market behavior. Confidence in this conclusion is moderate.

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  15. #20

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    Default Re: Dow Theory

    Quote Originally Posted by Bullitt View Post
    After a while, you might just end up establishing your own Dow Theory opinion.
    Thanks for the links Bullitt, I've been wanting to do some reading on this subject.

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  17. #21

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    Default Re: Dow Theory

    Richard Russell is suggesting that, far from condirming that a bear market is in progress and presaging further market weakness, a close in the Transportation ZAverage below its January low (4398.97) might instead signal that the market's decline is about over. I would keep a close eye on the Utilities.

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  19. #22

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    Default Re: Dow Theory

    Richard Moroney from Dow Theory Forecasts posted a sample of his most recent newsletter, Dow Theory Forecasts, in Barron's this past weekend.

    How Much Cash to Stash
    Dow Theory Forecasts by Horizon Publishing
    7412 Calumet Ave., Hammond, Ind. 46324

    July 21: Our recommended cash position depends on the market's primary trend and the opportunities we see in individual stocks. While it has become difficult to argue that the market's trend is up, the values available in the market appear more attractive than they have been in years. Good values can become better values, and we would view a breakdown in the Dow Transports below the March low of 4,398.97 as a reason to raise our cash position. But for now, we still see reasons to keep our cash position at 15% to 20%.


    The Transports have not confirmed the bearish trend. With a close in the Transports below 4,398.97, both the Dow Industrials and Dow Transports would be trading below prior significant lows -- and the validity of the April bull-market signal would be in question. Without new lows in the Transports, recent action represents divergence -- a reason for caution, but not a clear indication under the Dow Theory. [The Dow Transportation Average was recently at 4,916]....


    High-quality growers are trading at attractive valuations. The average trailing price/earnings ratio of S&P 1500 stocks has dropped close to 18, a 13-year low. The average company's earnings growth has held up well, partly because of continuing strength in energy and technology...Going forward, the size of our cash position will hinge importantly on whether energy and tech can maintain their operating momentum -- and whether other sectors can deliver improved growth.
    -- Richard Moroney
    http://online.barrons.com/article/market_watch.html

    www.dowtheory.com

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  21. #23

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    Default Re: Dow Theory

    Quick little update on where we stand in Dow Theory Land....

    On the DJIA we're watching the July lows of 10,962 and the Transports we're watching for a break of 4,653 which would signal a new bearish trend.

    Richard Russell, another Dow Theorist, has this to say about the July lows.

    All the above are in favor of the bear market designation. The action has not been typical bull market action. If we are in a bear market, then following the current rally, the market will turn down again to test, and probably violate, the July l4 lows (Dow 10962.44).
    http://www.gold-eagle.com/gold_diges...ell081108.html

    Like always I guess we'll have to wait and see!

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  23. #24

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    Default Re: Dow Theory

    Yesterday gave a Dow Theory non-confirmation sell signal. DJIA broke the prior lows, but the low wasn't confirmed by the transports. It will be interesting to see whether or not yesterday qualifies as an actual break of the lows after today registered such an enormous accumulation day. One would think it would, but stranger things have happened.

    On a side note: This day, 9/16/08, may have possibly been the highest volume day ever on the NYSE.

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