The Dow Jones Industrial Average’s 767-point tumble in afternoon trading Friday, to break down below the June 17 closing low (29,888.78), not only showed that the bear market was alive and kicking, it also triggered a sell signal based on the century-old Dow Theory of market analysis. The Dow’s fresh low, coupled with a series of lower closing highs since the Dow’s Jan . 4 record close of 36,799.65, confirms the Dow Theory’s definition of a downtrend, a continuing pattern of lower peaks and lower troughs. And since the Dow Jones Transportation Average already closed on Sept. 16 below its June closing low, the Dow industrials’ new low completes a “sell” signal. And as MarketWatch contributor and founder of Hulbert Ratings LLC has written, the Dow Theory, despite its age, has been beating the broader stock market for a long time.
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