The Dow Jones Industrial Averages
A 767-point drop in Friday afternoon trading to break out below the June 17 closing trough (29,888.78) not only showed the bear market was alive and well, but also triggered a sell signal based on the ancient Dow theory of market analysis. The Dow’s fresh low, coupled with a series of lower closing highs since the Dow’s Jan. 4 record of 36,799.65, confirms the Dow Theory’s Definition of a Downtrend, an ongoing pattern of lower peaks and lower troughs. And since the Dow Jones Transportation Average
already closed on Sept. 16 below its June closing low, the Dow Industrials’ new low is completing a “sell” signal. And as MarketWatch contributor and founder of Hulbert Ratings LLC has written, the Dow theory, despite its age, is beating the broader stock market for a long time.