http://blogs.marketwatch.com/thetell/2011/12/23/dow-theory-whispers-a-buy-signal/
Dow Theory whispers a buy signal
December 23, 2011, 5:48 PM
In quiet pre-holiday trading, with hardly anyone noticing, the Dow Theory on Friday may very well have given a buy signal. That at least is the judgment of Jack Schannep, editor of TheDowTheory.com, and Richard Moroney, editor of Dow Theory Forecasts.
Though not all followers of the Dow Theory agree on the precise application of this venerable market timing system, there is general agreement that a bullish signal is flashed whenever both the Dow Jones Industrial Average DJIA and the Dow Jones Transportation Average DJT close above their previous rally highs. This happened at Friday’s close, when the Dow Industrials surpassed their late October high. In so doing, the Industrials joined the Dow Transports, which had already done so a day previously.
One of the Dow Theorists monitored by the Hulbert Financial Digest is not bullish, however. He is Richard Russell, editor of Dow Theory Letters. Thursday night, he wrote to clients that it is a mistake for Dow Theorists to focus on the movement of the Dow averages. “Reading the Averages was a late addition to Dow Theory publicized by William Hamilton and Robert Rhea. Actually, Charles Dow almost never mentioned the Averages in any of his numerous editorials which appeared in his Wall Street Journal.”
In Russell’s view, the essence of the Dow Theory is a focus on values, and in his opinion the average stock today does not represent attractive value.
For the record, though, two out of the three Dow Theorists monitored by the Hulbert Financial Digest disagree with Russell.
– Mark Hulbert
I hate this ----. What happened to (the relatively simple) 'save and invest for the future?' It's hard enough to save money and put it into the market. But putting that hard-earned money into the market only to watch it fade away? Too ----ing much. It should be enough to work my --- off, divert a significant percentage of earnings into investments, and look forward to retirement.
It's no wonder the subtitle of the blog is 'Drinking Topics.'
ReplyDeleteSpeaking of which, I'm drinking from a bottle of Chateau St. Jean, 2006 Cab:
ReplyDeletehttp://www.chateaustjean.com/index.cfm?method=storeproducts.showList&productcategoryid=de83fd44-d5af-a188-2839-635d4695b3d2&isMarketingURL=1&maxrows=100
You know me, bros. I'm happy with 2-buck-Chuck. This bottle was a gift from someone.
I'll admit to being more than a little ticked off about being on the road Monday afternoon. B/c I honestly believe I would have moved the 403(b) entirely back into the equivalent of the SPX at the close. WTF, I actually stopped the car on Zinfandel Road (or is it Lane) to think about it. The complexity of figuring out how to make it happen via smartphone definitely factored in to the decision to 'Be prudent, you're not watching the markets today, forget it.' But I can't forget about it!
ReplyDeleteOf course, it would have been a one-day wonder only. Still, I would have captured a +3% gain.
ReplyDeleteMy entire gain for 2011 works out to about +5%, for crying out loud. It'could have' been +8%.
ReplyDelete----, ----, ----.
ReplyDeleteThanks for bearing with me.
ReplyDelete2nd - You can still capture 3% before the end of the year...just put it all in WAMUQ.pk...I hear they have a lot of growth ahead.
ReplyDeleteRegarding the subject of this post, I don't think the topic of Dow Theory is anything new. We can still slug away $X every month into a retirement account managed by ourselves and earn enough to live off of through dividends and capital appreciation. Even if the market goes sideways for 12 years. There are plenty of blue chip companies significantly higher than they were 12 years ago, especially after factoring in dividends.
True. As long as you didn't count on someone watching your BAC.
ReplyDeleteSo we have two proponents of the Dow Theory calling a buy signal. Russell disagrees. Landry is looking for resolution to the downside. Cara is outright bullish. Re the Hulbert Sentiment Index, it was 'closing in on bullish, but not there yet.'
ReplyDeleteWTF. Well, I'm leaning towards a sell off, followed by an all-in entry into SPX.
I can now officially proclaim- I can't tell the difference between a $90 bottle of wine, and a $2 bottle of wine.
ReplyDeleteThat's after half a bottle.
ReplyDeleteWell... the 2 buck chuck is not a bad Napa wine.
ReplyDeleteMy wife like s the Chard and I like the Merlot.
A year or so ago they had an Australian Chard that was good too.
I suspect, given the right $90 bottle, you could tell the difference or that there IS a difference.
For example, try even a $25-30 of Carneros Chard against the Trader Joe's Shaw Chard and there is no comparison.
Of course that could just be the Barbancourt and coke talking....
On this blog, it's always 50/50 whether it's a mind-altering substance talking...
ReplyDeleteAnd I include an awesome trade in the 'mind-altering' category...
ReplyDeleteinteresting intro 2nd, thx
ReplyDeletejust checked and see i sold my last sso shares after the close at 47.07
I still have my feb 127 spy calls leftover from the strange, last price is 3.82, i need 5.40 to break even. that's a long way to go.
For me it's only after hours on Friday through Saturday night. It wasn't always that way though....
ReplyDeleteYellowtail Cab for me tonight. Heading to the in-laws tomorrow for several days...graveyard shift feeding coming up...maybe I'll just pull an all nighter.
ReplyDelete3 years ago I was pulling an all nighter with my friends and some girls we met at the bar. Now it's the little man. Funny how life changes.
ReplyDeletenew batman trailer. last one was killer
ReplyDeletehttp://www.imdb.com/title/tt1345836/#lb-vi2823134745
Friends, READ THIS!
ReplyDeleteThen put together with Brandt and Jim Rogers.
http://www.ritholtz.com/blog/2011/12/santa-rally-or-grinch-in-disguise/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29
BE CAREFUL
weird that author of the article on ritholtz didnt mention that financials energy industrials and materials were the top 4 out of 5 sectors...arent those non defensive?
ReplyDeleteI'm just being cautious. Landry also mentioned that it is entrely possible we are seeing some 'end of year' manipulation, and I will tell you, he is no conspiracy nut like certain bloggers we all know.
ReplyDeleteFYI:
ReplyDeleteElectric utilities (central), household products, electric utilities (east), electric utilities (west), internet, retail stores are the strongest relative strength groups as of Friday.
Utilities (pay dividends) are definitely defensive.
Recent rallies off of sucky (like some banks moving off of stimulus and having to sell preferred positions and issue more shares like BAC) doesn't make a sector strong. It is exactly the opposite, it's a sign of trouble and (I can't believe I'm going to say this) lousy fundamentals. The last few months has been all about euro debt affect on banks.
http://thepatternsite.com/RSUpdate.html
Damn you guys keep some crazy hours! Just getting caught up after dinner last might with my parents and out ALL day with the kids. Had a blast.
ReplyDeletecc yeah i agree to a certain extent man. im not gonna sit here and say things r peachy keen. i just think businesses r much better prepped for a downturn now so i say we muddle thru...
ReplyDeletehaving said that i think the markets rally from here and we see 1350 again soon...possibly finish yr at 1300. too many pessimists / doubters out there. even on drinking topics...how many of us are bullish. id say maybe bb and then im a distant second and thats it. so most of us r looking to get short or are in cash. so whos left to sell?
ReplyDeleteLOL! All those who bought to rally to here and all those comprised of the overhead a couple months ago.
ReplyDeleteI'll take 1300 but like all my opinions on the markets, they are loosely held and have caveats.
Maybe not short but cash doesn't bother me, it's a position.
Merry Christmas!
Merry Christmas everyone! Let's hope Santa gives us a nice present next week. :)
ReplyDeleteMerry Christmas all!
ReplyDelete