Dow’s Lower Low Triggers Dow Theory Sell Signal


The DJIA of the Dow Jones Industrial Average,
767-point tumble in Friday afternoon trade, to break out below the June 17 close (29,888.78), not only showed the bear market was alive and kicking, it also triggered a sell signal based on the age-old Dow theory of the 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 highs and lower lows. And since the Dow Jones Transportation Average DJT,
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, has long beaten the broader stock market.

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