By Matthew Kerkhoff
It’s Columbus Day in the states and action across financial markets is subdued as the U.S. bond market remains closed for the holiday. With debt trading on pause, we can focus on equities, which have been working their way higher.
The last few months have been unkind to stocks, but lately we’ve seen buyers step in and provide support.
Dow Theory recently turned bearish, but looks to have reversed that signal on Friday. Below we see both averages confirming one another as they trace out new short-term highs. Let’s walk through the price action in more detail.
On August 25th both the Industrials (top chart below) and the Transports (bottom chart below) provided renewed bearish confirmation by setting simultaneous new lows. From that point we saw a reaction rally that peaked out on September 16th for the Industrials and September 17th for the Transports.
From there the averages resumed their descent but bottomed on ... Log in or subscribe to continue reading.