I am writing
these lines two hours before the close. The SPY, Industrials and Transports are
likely to close below the last recorded minor lows (those of Friday, August 1st)
and accordingly a secondary (bearish) reaction against the primary bullish trend
will be signaled, because:
a) At least
two indices declined more than 3% from the latest recorded highs (July 16, for the
Industrials, July 23 for the Transports, and July 24 for the SPY). In fact, the
three indices we monitor have declined by more than 3%.
b) The
decline has averaged more than 8 trading days for all three indices. In fact,
the SPY will have declined 8 trading days, the Transports will have declined 9 trading
days and the Industrials will have declined 14 trading days, which gives us an
average decline of 10.33 days.
c) More (much
more) than 10 calendar days of declines on at least 2 indices has been
fulfilled.
Tomorrow I
will further elaborate. In the meantime suffices to say that a down close will
usher stocks into a secondary reaction. This doesn't change (for the time being) the primary trend, which remains bullish, but changes the secondary trend from bullish to bearish.
Sincerely,
The Dow
Theorist.
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