Dow Theory Confirmed SELL signal today
 

As I have said in the past that I am not a big proponent of the Dow Theory(IMO I feel it is WAAAAY too late of a signal)

There have been many posters discussing the DOW THEORY of late.......and with todays avalanche type close (after attempting to once again rally) a SELL SIGNAL was confirmed as NEW lows in the DJ Industrials and Transports were BOTH confirmed simultaneously

Any thoughts guys?

Stephen

Re: Dow Theory Confirmed SELL signal today
 

awesome theory when you know to sell when everything is just begining to look cheap. All im gonna say is I wish bought more sp puts back in october. I sold them though and am gonna rebuy before the next fed meeting as I really feel they will not cut rates. When that happens get ready for 300 pt drop. Ill either do it the day before the meeting or into the next rally.

Re: Dow Theory Confirmed SELL signal today
 

If its a sell theory today, thats hilarious. Wouldn't that put your net gain for the year at 0%?

Re: Dow Theory Confirmed SELL signal today
 

Year ain't over yet. A short position may pay off nicely by Dec 31.

Re: Dow Theory Confirmed SELL signal today
 

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If its a sell theory today, thats hilarious. Wouldn't that put your net gain for the year at 0%?

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As of now YES....and thats why IMO I feel the Dow Theory is WAAAAAY too late of a signal.But I also wouldnt be surprised to see some parabolic short covering RALLY into the New Year either at some time in the next few weeks......for more reasons than one [img]/images/graemlins/smirk.gif[/img]

Stephen

Re: Dow Theory Confirmed SELL signal today
 

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If its a sell theory today, thats hilarious. Wouldn't that put your net gain for the year at 0%?

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The sell signal is more for insurance so that you don't get caught in a sharp downturn.

In the 1929 Crash, most of the "experts" thought the first 15% drop was just a correction. When all was said and done, the dow dropped 89%.

The people who didn't get wiped out were the ones who set an arbitrary sell point, and got out before the real carnage.

Re: Dow Theory Confirmed SELL signal today
 

[ QUOTE ]
[ QUOTE ]
If its a sell theory today, thats hilarious. Wouldn't that put your net gain for the year at 0%?

[/ QUOTE ]

The sell signal is more for insurance so that you don't get caught in a sharp downturn.

In the 1929 Crash, most of the "experts" thought the first 15% drop was just a correction. When all was said and done, the dow dropped 89%.

The people who didn't get wiped out were the ones who set an arbitrary sell point, and got out before the real carnage.

[/ QUOTE ]

There was ONE major distinction from 1929- present time though.....as back then you could buy stocks with 10% down.

With many market participants being 90% MARGINED..... the severity/intensity of the crash was inevitable

SF

Re: Dow Theory Confirmed SELL signal today
 

[ QUOTE ]
If its a sell theory today, thats hilarious. Wouldn't that put your net gain for the year at 0%?

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don't forget to factor in the devaluation of the dollar. anyone in the sp500 has lost 10% in purchasing power YTD.

Re: Dow Theory Confirmed SELL signal today
 

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As I have said in the past that I am not a big proponent of the Dow Theory(IMO I feel it is WAAAAY too late of a signal)

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What is your favorite signal/signals of a coming bear market?

Re: Dow Theory Confirmed SELL signal today
 

[ QUOTE ]
awesome theory when you know to sell when everything is just begining to look cheap. All im gonna say is I wish bought more sp puts back in october. I sold them though and am gonna rebuy before the next fed meeting as I really feel they will not cut rates. When that happens get ready for 300 pt drop. Ill either do it the day before the meeting or into the next rally.

[/ QUOTE ]

i've learned something in these past few attempts at guaging the fed. do not underestimate the fed's willingness to cut rates.

inflation expectations have been well anchored and the fed i think will continue to test them.

id expect a cut and further expect the fed to (arguably justifiably) state the reason as tightening credit conditions and the likely ensuing hit to consumer spending.

exports = 12% GDP.
spending = 70%GDP.

so a 10% drop in spending hurts more than a 50% increase in exports helps.

many studies estimate the following relationships:

a $100 fall in financial welath reduces consumer spending $3-$5 and acts very quickly (no lag, same quarter affect)

a $100 fall in housing prices reduces consumer spending $4-$9 and takes a long time to work through the system (long lag)

basically this means that housing will be a significant drag on the economy in all likelihood while at the same time, falling asset values could hurt spending even more which could produce a 10% overall drop in spending, which would in effect take at least a full point off of GDP.

given all that i'd thinkt he fed could justify further cuts.

Barron