{"id":126456,"date":"2018-05-09T19:28:56","date_gmt":"2018-05-09T23:28:56","guid":{"rendered":"http:\/\/countingpips.com\/?p=126456"},"modified":"2018-06-01T15:39:48","modified_gmt":"2018-06-01T15:39:48","slug":"how-this-classic-market-theory-can-warn-you-of-big-turns","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2018\/05\/how-this-classic-market-theory-can-warn-you-of-big-turns\/","title":{"rendered":"How This Classic Market Theory Can Warn You of Big Turns"},"content":{"rendered":"
May 9, 2018<\/div>
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Dow Theory non-confirmations attend the start of every big bear market<\/h3>\n

By Elliott Wave International<\/strong><\/p>\n

Dow Theory is a time-honored market analysis tool. Its name comes from Charles H. Dow, co-founder of The Wall Street Journal.<\/p>\n

In fact, The Wall Street Journal provided a capsule summary :<\/p>\n

Dow Theory holds that any lasting rally to new highs in the Dow Jones Industrial Average must be accompanied by a new high in the Dow Jones Transportation Average …. When the transport average lags, it can presage broader stock declines.<\/p>\n

In the Wall Street classic Elliott Wave Principle<\/em>, Frost and Prechter called Dow Theory the “grandfather” of the Wave Principle:<\/p>\n

Both [the Wave Principle and Dow Theory] are based on empirical observations and complement each other in theory and practice.<\/p>

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Critics of the theory say it’s no longer relevant. They argue that today’s economy is less dependent on transportation and more on technology.<\/p>\n

But EWI’s analysts say this historical indicator is still highly useful to investors.<\/p>\n

The Elliott Wave Theorist<\/em> showed charts of two historic bear markets, and both sported dramatic Dow Theory non-confirmations. Here’s the first one (N\/C stands for non-confirmation):<\/p>\n

\"1999to2000\"<\/p>\n

You’ll notice that in 1999-2000, the transports topped about eight months ahead of the Industrials. Starting in January 2000, the Industrials slid some 40% through October 9, 2002.<\/p>\n

\"2007NC\"<\/p>\n

In 2007, the transport’s peaked about three months before the Industrials. The 2007-2009 bear market was the worst since the Great Depression. The Dow Industrials lost 54%.<\/p>\n

A Dow Theory non-confirmation does not accompany every<\/strong> stock market downturn, but the historical record shows that it does<\/strong> attend the start of every big<\/strong> bear market.<\/p>\n

If you are prepared to take the next step in educating yourself about the basics of the Wave Principle — access the FREE Online Tutorial from Elliott Wave International.<\/p>\n

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This article was syndicated by Elliott Wave International and was originally published under the headline How This Classic Market Theory Can Warn You of Big Turns<\/strong><\/a>. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Dow Theory non-confirmations attend the start of every big bear market By Elliott Wave International Dow Theory is a time-honored market analysis tool. Its name comes from Charles H. Dow, co-founder of The Wall Street Journal. In fact, The Wall Street Journal provided a capsule summary : Dow Theory holds that any lasting rally to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-126456","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/126456","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=126456"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/126456\/revisions"}],"predecessor-version":[{"id":126458,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/126456\/revisions\/126458"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=126456"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=126456"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=126456"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}