Dow Theory Confirmed SELL signal today

[stephenNUTS]

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

[ahnuld]

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.

[RockyElsom]

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

[pig4bill]

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

[stephenNUTS]

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

[/ QUOTE ]

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

[Foghatlive]

[ 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.

[stephenNUTS]

[ 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

[gonebroke2]

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

[/ QUOTE ]

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

[cloudeleven]

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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)

[/ QUOTE ]

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

[DcifrThs]

[ 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