So if the DOW isn't a good representative of US stocks, does this mean the DOW would crash but the market won't ? I wouldn't pesonally imagine the 30 DOW stocks crashing and the rest of the market holding well ... unless as I said before, a particular sector benefits from it and becomes a safe haven.
DOW Crashing ?!
- Thread starter Bono
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If you were to go back and read the original Dow Theory proposed by Charles Dow a long time ago he talked about the DJIA and the Transports confirming bull and bear moves. I believe that the markets to substitute in the modern market should be the S&P 500 and the Nasdaq 100, which also happen to be the emini markets. Other than that, I think the original Dow theory has stood the test of time very well.
I think the thing that happens in the current market is that the DJIA is a focal point for public scrutiny, however it is a smokescreen as to what is really going on in the markets. During the bull market there were periods where the Dow was unable to move much while the general markets were running up. The opposite is true today. So many of the predominantly Nasdaq-based mutual funds that were flying so high a few years ago are now on a 3 year double digit down streak. I don't think they care that the Dow is still hovering around 10,000.
if I don't have an opinion, or a bias, then I have no basis for trade. whether it's based on a stochastic on a 1 minute chart or elliot wave on a yearly chart... any signal i get becomes my opinion because I put a certain amount of trust in my system.
you can call it a signal or system or opinion or bias, i'm just sharing mine. like everything else, eat it with salt.
you can call it a signal or system or opinion or bias, i'm just sharing mine. like everything else, eat it with salt.
TriPack,
And do I need to go back and read the DOW theory now ? This is KG1 stuff my friend ... but anyway, I'd like to draw your attention to a very important fact :
During a bull market, safe haven stocks/sectors don't run much. That's a rule, as far as I'm concerned. And when the bear market starts, the whole market goes down and safe haven stocks/sectors are mostly flat to slightly lower. Now when safe heaven stocks/sectors crash, what did you say will happen to rest of the market ? Forget about the DOW, Charles Dow and the whole theories now, because this has nothing to do with theories ... it's rather a brain excercise
And do I need to go back and read the DOW theory now ? This is KG1 stuff my friend ... but anyway, I'd like to draw your attention to a very important fact :
During a bull market, safe haven stocks/sectors don't run much. That's a rule, as far as I'm concerned. And when the bear market starts, the whole market goes down and safe haven stocks/sectors are mostly flat to slightly lower. Now when safe heaven stocks/sectors crash, what did you say will happen to rest of the market ? Forget about the DOW, Charles Dow and the whole theories now, because this has nothing to do with theories ... it's rather a brain excercise
There is a difference between people talking bearish and trading based on that opinion. Most ET members are short term traders so I doubt that the sentiment means much. Besides, a few people posting on a thread doesn't give a fair, representative reflection of ET members, their positions and what they may do in the future IMO.
Tripack,
what u said is very true ... however, I challenge you to find me an equivalent number of bullish traders, investors, speculators, you name it ... as I said in a previous post, everyone you talk to, whether short-term, intermediate-term or long-term investor, seems to be bearish on the market ... and no one here seemed to contradict this ...
as for the contrary theory, it could be applied as follows : most people are bearish on the market ... if they have already gone short ... then we have a problem, and the market doesn't have enough sellers to drop .. and could reverse course .. but if they haven't done so yet ... then this could be very very dangerous, as they would be encouraging each other to short the market and cause it to crash ...
what u said is very true ... however, I challenge you to find me an equivalent number of bullish traders, investors, speculators, you name it ... as I said in a previous post, everyone you talk to, whether short-term, intermediate-term or long-term investor, seems to be bearish on the market ... and no one here seemed to contradict this ...
as for the contrary theory, it could be applied as follows : most people are bearish on the market ... if they have already gone short ... then we have a problem, and the market doesn't have enough sellers to drop .. and could reverse course .. but if they haven't done so yet ... then this could be very very dangerous, as they would be encouraging each other to short the market and cause it to crash ...