Date:

Results:
$10,000 becomes:

Dow Jones Level:

Description: 

     On January 31st,1901 Charles H. Dow compared the stock market to the tides of the ocean when he wrote in the Wall Street Journal  "A person watching the tide coming in and who wishes to know the exact spot which marks the high tide, sets a stick in the sand at the points reached by the incoming waves until the stick reaches a position where the waves do not come up to it, and finally recede enough to show that the tide has turned. This method holds good in watching and determining the flood tide of the stock market."  

      If you think of the Dow Jones Industrial Average as being the measure of the tide on one part of the beach, and the Dow Jones Transportation Average as a measure on another part of the beach, both used to determine that the tide is indeed coming in or going out all along the seashore, rather than rogue waves in one place or the other, you will understand what Dow was getting at. Confirmation by both is an integral part of the Dow Theory.

     The classic Buy signal is developed as follows: After the low point of a primary downtrend in a Bear market is established, a secondary uptrend (this is the most often debated part of the Theory) bounce will occur. After that, a pullback on one of the averages must exceed 3%, according to Robert Rhea, the great Dow theorist of the 1930’s, must then, ideally, hold above the prior lows on both the Industrial and the Transportation Averages. Finally, a breakout above the previous rally high by both, constitutes a BUY Signal for the developing Bull market.

The chart represents how the Dow Jones Industrial Average and the Transportation Average might look:

The classic BUY (B-1) shown above is outlined as follows:
      1. Market Lows
      2. Bounce
      3. Pullback (hold above the lows)  
      4. Break up (above the bounce high)
More than one bounce can occur within the confines of the bounce highs and the lows. Any such non-confirmation by the other Average is inconsequential.

    While neither the primary nor the secondary trends have been specifically defined, my own research shows that a Bull market primary trend will have advanced in excess of 19% on both the Dow Jones and Standard & Poor’s 500 Indices. A Bear market primary trend will have declined in excess of 16% on both.

      A review of the Dow Theory signals implies that a secondary trend will usually bounce at least 4% on both the Industrials and Transportation Indices, and usually one or both will exceed 7%. According to The Dow Theory, by Robert Rhea, secondary reactions "usually last from three weeks to as many months, during which...the price movement generally retraces from 33 per cent to 66 per cent of the primary price change.."  In the same book, Dow's successor, William Peter Hamilton, described "secondary reactions...(as) lasting from a few days to many weeks".

     What is precisely defined is the extent of the "return move", the pullback after a bounce up from a Bear market bottom, or the bounce after a pullback from a Bull market top, and that shall exceed 3% on either of the averages.

      A Bear market Sell signal is determined in much the same way, but opposite to a Buy Signal. When a Bull market tops and sets back, and the subsequent rally that goes back up (again, over 3%) and falls short of reaching the previous high and then penetrates the recent lows on the next decline as measured by both the Industrial and Transportation Averages, a SELL Signal is generated indicating a Bear market.

The above classic SELL (S-1) is outlined as follows:
     1.  Market Highs
     2.  Pullback
     3.  Bounce (to below the highs)
     4.  Break down (below pullback)

Other acceptable patterns are as follows:

BUY (B-2) shown above
     1.  Market Lows
     2.  Bounce
     3.  Pullback (one index makes a new low)
     4.  Break up

SELL (S-2) shown below
    1.  Market Highs
    2.  Pullback
    3.  Bounce (one makes a new high)
    4.  Break down

BUY (B-3) shown below
    1.  Market Lows
    2.  Bounce
    3.  Pullback
    4.  Break up (one only)
    5.  Pullback (other makes lower low)
    6.  Break up (over both bounce highs)
 

SELL (S-3) shown below
    1.  Market Highs
    2.  Pullback
    3.  Bounce (one makes a new high)
    4.  Pullback (other makes a new low)
    5.  Bounce (first makes a newer high)
    6.  Break down (below both pullback) 

BUY (B-4) shown below
    1.  Market Low
    2.  Bounce
    3.  Pullback (one may go to new low)
    4.  Lower bounce (on one or both)
    5.  Lower pullback (another new low)
    6.  Break up (over first bounces)

BUY (B-5)
    1.  Market Low
    2.  Bounce
    3.  Pullback
    4.  New all-time highs on both

Other combinations of the above can occur with non-confirmations (divergence) at various points and still qualify as "signals". New all-time highs negate the need for pullbacks to confirm a new Buy.

NOTE: The signals in the left-hand column are the traditional interpretation of the original Dow Theory.  How those signals occurred may be found in the "Detailed and Complete Record" here.

The record and specific details of how the signals occurred using  the interpretation from my book "Dow Theory for the 21st Century" are available for Subscribers only.

$10,000          

280.90

01/19/54

$10,005          

288.27

12/31/54

$14,651          

404.39

12/30/55

$18,414          

488.40

12/31/56

$18,388

499.47

12/31/57

$18,967

435.69

05/02/58

$19,059

459.56

12/31/58

$24,826

583.65

12/31/59

$29,763

679.36

03/03/60

$26,967

612.05

12/30/60

$27,548

615.89

2/23/61

$27,642

654.42

12/29/61

$31,653

731.14

04/26/62

$29,694

678.68

11/09/62

$30,130

616.13

12/31/62

$32,052

652.10

$38,695

762.95

12/31/64

$45,749

874.13

12/31/65

$52,366

969.26

05/05/66

$49,133

899.77

12/30/66

$50,684

785.69

01/11/67

$50,751

822.49

10/24/67

$56,279

888.18

12/29/67

$56,745

905.11

10/01/68

$58,909

942.32

12/31/68

$59,472

943.75

02/25/69

$56,992

899.80

10/27/69

$59,396

860.28

12/31/69

$55,674

800.36

01/26/70

$53,639

768.88

09/28/70

$55,943

758.97

12/31/70

$62,421

838.92

07/28/71

$66,149

872.01

12/31/71

$67,389

890.20

02/10/72

$67,635

921.28

12/29/72

$76,977

1020.02

2/23/73

$72,811

959.89

12/31/73

$77,130

850.86

12/31/74

$82,927

616.24

1/27/75

$83,250

692.66

12/31/75

$106,781

852.41

12/31/76

$130,597

1004.65

10/24/77

$108,392

802.32

12/30/77

$109,553

831.17

06/06/78

$112,441

866.51

$107,648

805.01

12/31/79

$118,484

838.74

12/31/80

$143,938

963.99

07/02/81

$147,084

959.19

12/31/81

$156,080

875.00

10/07/82

$168,791

965.97

12/31/82

$185,407

1046.54

$233,055

1258.64

01/25/84

$228,800

1231.89

11/6/84

$245,165

12/31/84

$240,431

1211.57

12/31/85

$320,238

1546.67

12/31/86

$406,367

1895.95

10/15/87

$515,904

2355.09

12/31/87

$522,011

1938.83

$526,632

12/30/88

$567,712

2168.57

10/13/89

$690,657

2569.26

12/29/89

$701,196

2753.20

$723,170

2935.19

$696,567

2809.65

12/31/90

$716,053

2633.66

1/18/91

$717,964

2646.78

12/31/91

$885,154

3168.83

12/31/92

$923,621

3301.11

12/31/93

$1,079,925

3754.09

12/30/94

$1,131,774

3834.44

12/29/95

$1,545,971

5117.12

12/31/96

$1,988,782

6448.27

12/31/97

$2,479,930

7908.25

8/4/98

$2,686,917

8487.31

11/2/98

$2,716,142

8706.50

$2,872,309

9181.43

9/23/99

10318.59

11497.12

10786.85

11/8/01

9587.52

10021.50

6/25/02

1/6/03
 

$3,492,510

10453.92

10783.01 

10717.50

12463.15

12799.04

13264.82

4/18/08

12849.36

9/29/08

10365.45

8776.39

4/9/09

8083.38

12/31/09

$6,157,365

10428.05

6/30/10

9774.02

9/27/10

12/31/10

11577.51

8/2/11