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Bullish developments

 

Dow indices surge

In the words of Jack and Bart Schannep of thedowtheory.com, the most accurate experts on the interplay of these three indices, their latest move has put them "in the clear." From mid-September to early October, they were at risk of switching into a downtrend. Their latest break to new highs has put that particular danger to bed, at least for now.

 

Bad breadth before

Not only has the price uptrend in the world's most important stock market been confirmed, but its internal make-up has improved too. I noted some weeks ago that breadth on the New York Stock Exchange had worsened noticeably over the previous four months (Bad Breadth, 26 September) and how this was a worry for the bull market’s medium-term survival.

Breadth is the concept that says that a healthy trend in an index is one in which most of the index members are taking part. So, when the FTSE 100 is going up for example, we would want to see as many of its individual members as possible consistently doing the same. When the index as a whole is going one way but a majority of its members aren’t doing the same, it can be a sign of internal weakness.

 

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