Posted on October 19, 2020
Dow Theory doesn’t get a lot of attention these days.
At one time it was the only “technical” game in town.
But that was nearly a century ago.
In any event, Dow Theory still has its uses, and we monitor it – as we do nearly all approaches to the investment game – in order to glean every possible edge available.
That said, Dow Theory developments over the last few days are proving interesting.
Take a look here at the Transportation Average for the last three years –
As you can see, the index just posted new highs – its first since September of 2018.
According to the theory, the primary trend of the market will be UP if and when the Dow Industrials confirm the Transport’s highs with a high of their own.
But that hasn’t happened.
The Industrials enjoyed several bumps higher since their September 2018 crest, with all-time markers set again this February at 29,568.
But thereafter, the Batflu struck, and both indices sunk to new major lows.
Which means we’re now in a period of ‘Non-Confirmation’.
More on that in a moment.
But first, take a peek at the Industrials –
The Industrials have not been able to squeeze out new highs of late, and that means the next intermediate move will tell the tale.
Either way, though, a resolution to the current impasse has to materialize.
With kind regards,
Hugh L. O’Haynew