Quote of the Day: Dow Theory

Monday, November 26, 2007 | 02:15 PM

“People don't understand the significance of the ‘bear market signal’ of November 21. I stated on Wednesday's site (Nov. 21) that the breakdown of the Industrials signaled THE EXISTENCE of a primary bear market. It didn't signal the beginning of a bear market, Wednesday's action gave us the final word via Dow Theory that a primary bear market was in force.

... A precept of Dow Theory is that neither the duration nor the extent of a bull or a bear market can be predicted in advance. It is far easier to IDENTIFY the end of a bull or bear market than it is to predict their end. Bull markets tend to build extended and often deceptive tops while bear markets tend to build more definite and identifiable and faster bottoms. Therefore, it's usually easier to identify the bottom of a bear market than it is to identify a bull market top.

... I expect a lot of wild and confusing movements from the stock market in the days ahead. But I remind subscribers that a rally here, even a powerful rally, will not mean that the bull market has suddenly been reborn. This bear market will not end in four months. But any rally here will allow subscribers to ‘trim their sails’."


-Richard Russell, Dow Theory Letters

Monday, November 26, 2007 | 02:15 PM | Permalink | Comments (27) | TrackBack (0)
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barry the man who invents a method to convince his clients to "trim their sails" after such a prolonged bull market will indeed have replaced Edison
we have here extreme volatility particularly in the medium to wannabee resource stocks and people have had at least 3 to 4 opportunities since september to cash in or lighten up
standard reasons are "cgt reluctance" "the stocks been good to me so far" "I know the ceo (other senior executive) and the coy has another good announcement soon" "the analyst from (underwriting broker has just upgraded the stock" etc etc
plus c'est la meme chose plus ca change
This little Bear will stick to Richard Russell rgds pcm

Posted by: peter from oz | Nov 26, 2007 2:30:36 PM

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