Dow Theory says to watch the Dow Jones Industrial Average and the Dow Jones Transportation Average for confirmation or non-confirmation signals.
As one might suspect, Dow Theory appears to be sending a bearish message to investors today.
The Dow Jones Transportation Average struggled to confirm the Dow Industrials rally to new highs, before collapsing lower.
The Transports also were the first to break down below its long term up-trend line and 50 month moving average at (1). The Dow Jones Industrial Average broke down shortly thereafter (confirmation).
Several other indices look the same, including the Dow Jones Utilities and NYSE Composite. This isn’t a good look for the market.
Dow Theory, coupled with breakdowns across key stock indices, may be sending an important bearish intermediate-term signal to investors. Stay tuned!
Dow Theory Chart – Bearish Signal in Play?
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