A lower Dow index causes a sell signal for the Dow Theory

Dow Jones Industrial Average, Dow Jones Industrial Average,
-1.62%
A 767 pips tumble in Friday afternoon trade, to crash below the June 17 closing low (29888.78), not only showed that the bear market was alive and kicking, but also triggered a sell signal based on century-old Dow Market Theory Analytics . The new low for the Dow, combined with a series of lower closing highs since January from the Dow. 4 record close at 36,799.65, confirming the Dow Theory’s definition of a downtrend, a continuous pattern of lower tops and lower bottoms. And since the Dow Jones Transportation Index (DJT),
-1.99%
Already closed on September 16 below the closing low of June, the new low of the Dow Jones Industrial Average completes the “sell” signal. As a MarketWatch contributor and founder of Hulbert Ratings LLC wrote, Dow Theory, despite its age, has been outperforming the broader stock market for a long time.

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