This Market Decline Is Just Getting Started! The Dow Theory Indicates Sell Signal Was Triggered On Nov. 7 As Situations In US And Europe Continue To Deteriorate.
November 11th, 2012
Mark Hulbert: Is the Dow Theory now on a sell signal?
Did the Dow Theory generate an official sell signal earlier this month?
Two of the Dow Theorists I monitor say “yes.” The other one remains on a buy signal.
Instead, the Theory was introduced in dribs and drabs over the first three decades of the last century — in editorials in The Wall Street Journal by its then-editor, William Peter Hamilton.
Consider the three Dow Theory preconditions for a sell signal:
Step #1: Both the Dow Jones Industrial Average (US:DJIA) and the Dow Jones Transportation Average (US:DJT) must undergo a “significant” correction from joint new highs.
Step #2: In their subsequent “significant” rally attempt following that correction, either one or both of these Dow averages must fail to rise above their pre-correction highs.
Step #3: Both averages must then drop below their respective correction lows