Dow’s lower low triggers Dow Theory sell signal

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The Dow Jones Industrial Average’s
DJIA,
-2.06%

767-point tumble in afternoon buying and selling Friday, to damage down under the June 17 final low (29,888.78), now not simplest confirmed that the undergo marketplace used to be alive and kicking, it additionally induced a sell signal according to the century-old Dow Theory of marketplace research. The Dow’s contemporary low, coupled with a sequence of lower final highs because the Dow’s Jan . 4 document shut of 36,799.65, confirms the Dow Theory’s definition of a downtrend, a seamless trend of lower peaks and lower troughs. And because the Dow Jones Transportation Average
DJT,
-2.65%

already closed on Sept. 16 under its June final low, the Dow industrials’ new low completes a “sell” signal. And as MarketWatch contributor and founding father of Hulbert Ratings LLC has written, the Dow Theory, regardless of its age, has been beating the broader stock market for a very long time.

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