The Dow Jones Industrial Average’s DJIA, -1.89% 767-point tumble in afternoon trading Friday, to break down below the June 17 closing low (29,888.78), not only showed that the bear market was alive and kicking, it also triggered a sell signal based on the century-old Dow Theory of market analysis. The Dow’s fresh low, coupled with a series of lower closing highs since the Dow’s Jan . 4 record close of 36,799.65, confirms the Dow Theory’s definition of a downtrend, a continuing pattern of lower peaks and lower troughs. And since the Dow Jones Transportation Average DJT, -2.47% already closed on Sept. 16 below its June closing low, the Dow industrials’ new low completes a “sell” signal. And as MarketWatch contributor and founder of Hulbert Ratings LLC has written, the Dow Theory, despite its age, has been beating the broader stock market for a long time.
