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Matt's Market Insights

During market corrections, a frequent question we receive from subscribers is, "What price level should I be watching on the Dow and Transports for a possible sell signal?"

There are many price-action cues that an investor can interpret as a sell signal: a bearish crossing of the MACD, a drop below prior support, the breaching of a trendline; but usually this question has to do with interpreting traditional Dow Theory. I've addressed this in previous remarks but I don't think it hurts to recap, especially since we could potentially see this play out in the weeks ahead.

During the initial pull back from new highs, we cannot determine the price level at which a Dow Theory sell signal would be triggered. This is because the triggering of a Dow Theory sell signal does not depend on what happened prior to the last new high, only what happens from the most recent ... Log in or subscribe to continue reading.

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