Cycles | MAR 2009
Dow Theory Direction by Tim W. Wood, CPA
Dow Theory Direction by Tim W. Wood, CPA Why do opinions on Dow theory so often vary, and why do Dow theory “signals” so often fail? Typically, there is one common denominator that becomes immediately apparent in most articles about Dow theory: too many of the authors of those articles have not studied the original writings of Charles H. Dow, William Peter Hamilton, or Robert Rhea. These original writings and particularly those of Robert Rhea are essential if we are to understand what has come to be known as Dow theory. The only other person I know who has studied the original writings by Dow, Hamilton, and Rhea is Richard Russell. As a result, Russell is the only other orthodox Dow theorist I know of, and he has fought misquotes, misunderstandings, and erroneously written articles about Dow theory his entire career. NONCONFIRMATION AND THE ONGOING BEAR I first warned about the Dow theory nonconfirmation, and the impending bear market, in October 2007. There was approximately a four-week period following the October 9, 2007, closing high on the Dow Jones industrials that was a classic “sell spot” in accordance with orthodox Dow theory. It was during this time that I began warning my subscribers and guided them through the developments as we watched the primary bearish trend take root.
by Tim W. Wood, CPA
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