dow theory
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Started by bear - Sept. 3, 2019, 12:59 p.m.

several commentators have pointed out the non-confirmation of the dow theory.  

the dow set a new high this summer, but the transports did not.  dow theory says that this is setting up a big trend change.  or... they both need to power to new highs soon to nullify this non-confirmation.  

Re: dow theory
By metmike - Sept. 3, 2019, 6:36 p.m.
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Thanks bear!

This thread last month addresses the intrigue:

Now for the main point related to why Richard brought this up:

Either the Dow Transports or the Baltic Dry index isn’t telling the truth

The lagging transports might worry you even if you’re not a follower of the Dow Theory. That’s because the transportation sector is widely considered to be a leading economic indicator, on the basis that this sector will be among the first to signal coming economic weakness.

As I’ve pointed out before, there is empirical support for this theory. According to research conducted by the Bureau of Transportation Statistics of the U.S. Department of Transportation, declines in the sector have, at least over the last three decades, led economic slowdowns by an average of four to five months.

This is certainly enough reason to sit up and take notice. This backdrop provides context for the extraordinary rally of the Baltic Dry Index, which reflects the cost of moving raw materials by ship. Many analysts pay close attention to this index, and it has many notable successes in presaging economic downturns, as detailed in a 2016 New Yorker article entitled “The Surprising Relevance of the Baltic Dry Index.”