Thursday, March 21, 2013

Dow Theory Buy Signal?

by Tim W. Wood, Financial Sense:
As a result of the Industrial’s move above their 2007 high last week, there has been a lot of talk about that advance triggering a so-called Dow theory “buy signal.” First let me say that according to the original writings of Charles H. Dow, William Peter Hamilton and Robert Rhea, there is no such thing as a “buy” or “sell signal” in accordance with orthodox Dow theory. Rather, our Dow theory founding fathers would anticipate trend changes, near anticipated market tops and bottoms, based on market behavior. It was actually these areas of anticipated trend change that they referred to as “buy and sell spots.” They would then take their positions accordingly and would then use the joint price movement of the averages above or below previous secondary high or low points to either confirm or negate their suspicions of the trend change. It was then these joint movements of the averages above and below secondary high and low points that served to confirm a bullish or bearish “primary trend change” in accordance with orthodox Dow theory.
Read More @
Please bookmark us

No comments:

Post a Comment