Apologies if this is a rehash...
"A Dow Theory sell signal?
Dow industrials and transports at new correction lows"
At least according to some interpretations of the venerable Dow Theory, a bear-market signal was generated at Wednesday's close, when both the Dow Jones Industrial Average and the Dow Jones Transportation Average closed below their previous correction lows of early June.
This interpretation appears to be the one favored by two of the Dow Theorists tracked by the Hulbert Financial Digest: Jack Schannep, from TheDowTheory.com, and Richard Moroney, of Dow Theory Forecasts.
The third Dow Theorist that the Hulbert Financial Digest identified as having already turned bearish, and so today's action is mere confirmation of that bearish trend. He is Richard Russell, editor of Dow Theory Letters.
In addition to previously concluding that the Dow Theory was bearish, Russell also has indicated that he would view a Dow close below 9,800 as being bearish according to another technical analysis formation: the so-called head and shoulders. That occurred Wednesday, of course, with the Dow closing at the 9,774 level.
Earlier this week, Russell wrote that the breaking of the head-and-shoulders formation would have very bearish consequences: "All previous plans, scenarios and strategies will hit a stone wall. Wall Street and public sentiment will turn black-bearish. Consumers will head for the storm cellars, and, once in, they'll shut the door above them and lock it."
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taxidermy thursday, page-89
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