Dow Theory Revisit نظرية الداو

The Dow Theory is one of those signals, which can be accurate but not at all precise. The Theory states that when Dow Jones Industrials Average hits a new high or a new low, then it must be confirmed by the Dow Jones Transportation Index. This implies the following: if we see new highs in the Dow Jones Industrials Average without news highs in the Dow Jones Transportation Average, then the highs in the Industrials will not last.  Well, it's been three years since the Transportation index has last new highs. Said differently, the Industrials has hit multiple new highs in 2024 without the Transportation confirming, but the Industrials did have three different episodes of falling 5% (April, May and August).

Another point worth noting in the bottom chart is the Industrials/Transportation ratio, reaching 2.67, which appears to be a right a shoulder matching the left shoulder high from...October 10, 2019. Yes, correct...October 2019--exactly 5 years ago from today. 

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