My amateur exposure to Dow Theory is through the Sperandeo books last discussed about a year ago near the March 03 lows. In light of the action in the Dow this month and February, I wonder if anyone would be interested in discussing where Dow theory is now pointing us. I would confirm a change of the intermediate Dow trend that has been running a year or more about March 10 on the break below 10,400 and would ideally be short as of then. But much depends on whether I start with the March 03 low as opposed to the October 02 low. Comments invited. Geo. http://bigcharts.marketwatch.com/javachart/javachart.asp?symb=DJIA&sid=1643
If by "change", you literally mean change, and not reversal, then there has been a potential change. However, it's okay for price to drop below the TL if it is able to regain its ground fairly quickly and forcefully. If it craps around below the TL and begins to drift lower, then you can assume there's been a trend change. As for a reversal, however, we're a long way from that. If you're shorting on the basis of that, you're too early. That doesn't mean you won't be successful, but according to these criteria, you're too early.
I'm no afficionado of the stuff myself, but I did note that the Dow Theory newsletter guy, who correctly called the bottom in 10/02, said last week that the DJIA had confirmed the transports to signal the end of the recent bull move.
======================== Main points of Dow theory i like; [1]''Price action determines trend ''; my comments apply mainly to $INDU-DIA, SPY,$NDX-QQQ. They broke below 50 day moving average; but my read & reread today of Dow notes main trend is defined by ''MANY months'' Cant call 50 dma ''many months'' by any measure. ''Main movement ''is not defined by daily fluctuations. [2]''Averages discount'' [3]'' Averages must confirm.'' Prefer William O' Neill application; which gives a broader peradventure more accurate picture of market than 30 DIA stocks & railroads. Especiall helps since i trade/invest more than DIA. William O Neill looks for confirmation of $INDU , NASDAQ, SPX. Like Victor Sperandeo also, however he doesnt day trade any more; my quotation marks are from Dow Theory. Trader5287, Looked / studied a 1 year SPY candlechart lately?
On study of 1 year monthly candlecharts of DIA, SPY; measure a trend including notice & count the big number of higher highs & higher lows of the price. Green light monthly compared to red monthly. Count the real small number of monthly lower lows & lower highs on 1 year candlechart . Much different in this bull market compared to last bear trend. QQQ has an additional red monthly candle, probabilities are highest when all three confirm; so actually it would be more bullish for QQQ to confirm. QQQ & related took out lots of stops; DIA, SPY & related swing , position trades still have good long profit & loss.