Monday, June 14, 2010

Dow Theory Update

I continue to receive questions regarding Dow theory and whether or not a so-called "sell signal" has been triggered. Technically, with Dow theory there is no such thing as a buy or sell "signal." Rather, the Dow theory founding fathers anticipated trend changes and during these periods of such participation they would begin to establish their positions ahead of the anticipated trend change. They referred to these periods of anticipation as "buy and sell spots." Then, once the trend change occurred, that served as confirmation of the "buy and sell spots." Because there are very few original writings by our Dow theory founding fathers and because much of what is written is so often incorrect, most people today have misunderstood the orthodox Dow theory trend changes as being a Dow theory "buy or sell signal." In accordance with orthodox Dow theory, this is not correct. (more)

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