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Thread: Dow Theory

  1. #61

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    Default Re: Dow Theory

    I'm inclined to say Dow Theory is now signaling a bear market after cracking the February 28 low. Rules generally say it must make a significant low, rally at least 3%, then break down past the previous low. This would mean the trend is now down and bear market rules apply.

    Some theorists would consider the December 2018 or even the 2009 low to indicate the death of the secular bull. By that time, does it really matter?

    20% is a bear market definition loosely comes from the WSJ in 1990 when markets cratered during Desert Storm. Ironically, that bear market call turned out to be right near the low. Jack Schannep, a very successful Dow theorist, defines a bear market a 16% drop in both the Dow and S&P 500 over a period of time when it comes with his secondary signals which are for the most part, an art.

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  3. #62

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    Default Re: Dow Theory

    Looking like today gave a Dow Theory buy signal in DJIA. Looking for confirmation from transports.

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  5. #63

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    Default Re: Dow Theory

    Transports confirmed uptrend yesterday.

    Meanwhile, 50% of AAII is bearish and the guessers are still waiting for "healthy retest" to get back in. Two questions:

    1. Will you really get back in if the market goes down 10% from here? I mean it, really. It's so easy to say now, but the news will be pretty dire if the market goes down 10% from here.
    2. What is your plan if the bottom is already in?


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  7. #64

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    Default Re: Dow Theory

    Dow theory validated the current bull market as both DJIA / TRAN made new cycle highs at the close today. Both managed to make these new cycle highs after their respective secondary reactions lower.

    Dow theory gave an initial buy signal on 4/6.

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  9. #65

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    Default Re: Dow Theory

    Still on April 6 buy signal.

    Transports and DJIA now both above 200 DMA.

    Outlook: Uptrend jeopardized on a close below 25k DJIA and 8750 in TRAN. New high above recent June cycle would only confirm uptrend.

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  11. #66

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    Default Re: Dow Theory

    Still on a buy signal, as transports are holding up.

    DJIA is in a secondary reaction lower with a measured move to 26,500. Below 26,500 would be time to re-assess since the transports will surely be dragged lower.

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  13. #67

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    Default Re: Dow Theory

    Watching 33,300 (4-5% drop lower) on the DJIA for a sell signal. Transports have already given a non-confirmation sell.

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  15. #68

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    Default Re: Dow Theory

    My interpretation is we had a non-confirmation bear market signal from Transports as it reached 14,500, but Industrials did not confirm the move lower.

    Transports reversed and made a new secondary reaction high this week. Industrials confirmed this move. Long term bull market still intact, short term correction is over.

    tran2.png

    In addition, the Head and Shoulders pattern in the DJIA has been negated. This often leads to large bullish moves.

    djia4.png

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  17. #69

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    Default Re: Dow Theory

    There were some holdouts who said it's not a dow theory buy until both averages make new highs. Okay then, yesterday Transports made new highs thanks to the pump and dump ramp manipulators at reddit. They managed to drive Avis 108% higher which resulted in a 6%+ gain in the transports.

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