A primary bear market
I knew that Dow Theory had signaled a primary bear market on Wednesday. But I wanted to hear it from Mr. Dow Theory himself, Richard Russell. And Russell has spoken:
It was a noble battle, it was a battle that seemed almost endless. But today the great battle ended. Today the D-J Industrial Average closed below its August 16 low of 12845.78, thereby confirming the prior violation of the Transportation Average. In so doing, the stock market and the Dow Theory have spoken — they have confirmed the existence of a primary bear market.
However, he offers this caveat:
Note that the S&P and the Wilshire have NOT confirmed the Dow. In one of the strangest situations I’ve ever dealt with, neither the S&P 500 or the Wilshire 5000 have confirmed the Dow in that neither the S&P nor the Wilshire have violated their August 16 lows. What is the meaning of this absolutely weird situation? I don’t know — honestly I really don’t know. But it is certainly something to think about.
Does the superior action of the S&P and the Wilshire cast doubt on the Dow Theory bear signal? I don’t know. I’ve never in fifty years of watching market action seen this type of situation.
November 25th, 2007 at 11:54 am
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