by the Curmudgeon
Dow Theory sell signal is predicated on three developments: First, the Industrial and Transport averages must undergo a significant correction (usually at least 10%) from new highs. Then, during the subsequent rally, one or both of the averages must fail to recover above their prior highs. (That is known as a rally failure). Finally, both averages (DJI and DJT) must close below their prior correction lows.
1. The DJI correction low on Oct 29th was 24,442.92. DJI broke below that Oct 29 correction low on Nov 23th at 24,285.95. That was 1st leg of Dow Theory sell signal.
2. DJT closed today at 9,876.54 OR -74.62 points (-0.75%). That close was 2nd leg and triggered a Dow Theory Sell Signal.
Note that the Aden's were wrong in stating that DJT = 9905 had to be breached on close to confirm the Dow Theory Sell Signal. According to Yahoo finance, DJT =9,896.11 was the previous correction low on Oct 29th.
In any event, it appears a Dow Theory sell signal is
now in force! My esteemed colleague and co-author Victor Sperandeo
(Trader Vic) agrees 100%. The MAJOR TREND is now
down for U.S. equities, according to the Dow Theory!
Good luck and till next time
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Curmudgeon is a retired investment professional. He has been involved in financial markets since 1968 (yes, he cut his teeth on the 1968-1974 bear market), became an SEC Registered Investment Advisor in 1995, and received the Chartered Financial Analyst designation from AIMR (now CFA Institute) in 1996. He managed hedged equity and alternative (non-correlated) investment accounts for clients from 1992-2005.
Victor Sperandeo is a historian, economist and financial innovator who has re-invented himself and the companies he's owned (since 1971) to profit in the ever changing and arcane world of markets, economies and government policies. Victor started his Wall Street career in 1966 and began trading for a living in 1968. As President and CEO of Alpha Financial Technologies LLC, Sperandeo oversees the firm's research and development platform, which is used to create innovative solutions for different futures markets, risk parameters and other factors.
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