Dow Reality > Dow Theory

JC Parets
July 10, 2022

You hear people talk about Dow Theory all the time don't you?

What you might not know is that there's a lot more to Dow Theory than you think.

In fact, that whole DJ Industrials & Transports confirming or diverging from one another is not even in my top 5 most important Dow Theory Tenets.

You can read about what's actually important about Dow Theory here. Give it a read and then let me know what you think.

Today, if you don't mind, I'd rather focus on Dow Reality.

I see two very similar scenarios here between the DJ Industrial Average and the DJ Transportation Average.

Let's start with Papa Dow: The Industrials.

I see a peak in January 2018 and then a bottom in December of that year. I see a 161.8% extension of that move getting tested and then finally breaking out last year.

Then in May of last year we hit our next key extension target and the Dow stopped going up. (Also See: Cash & Champagne May 2021)

Then you have the Dow Transports.

Same thing: Peak in Jan 2018, low in Dec 2018, 161.8% extension tested, followed by a breakout last year.

Again, like the Industrials, Transports also peaked in May last year and stopped going up.

In both scenarios we're back down to the 161.8% extension of that 2018 decline and former resistance.

So far, they've both held that support.

But will that continue throughout the summer?

Feel free to weigh in.

We love to hear from you!

JC

 

Filed Under: