The Same Patterns Remain Even When the Market Index Changes

by Richard Evans

The Same Patterns Remain Even When The Market Index Changes Splash image

When the Dow was careening toward 5200 not too many weeks ago, a reporter from the Wall Street Journal called and asked what I thought. I replied that the Dow had simply retraced one-third of its prior advance, which is well within the confines of a secondary correction within a bull market. As it was, the low of the day was the end of the decline and the market promptly rebounded.

Apparently, though, the reporter was not impressed with my geometry that day, so he declined to use my information. However, the Dow Theory 1/3-2/3 concept, which I explained at some length just this past January in the AAII Journal, proved out once again.

The concept also played out with other averages, such as the Nasdaq composite. While the Dow may be perceived as stodgy and the Nasdaq as the up-and-comer, both markets move in trends, and similar trend analysis is applicable.

...To continue reading this article you must be registered with AAII.

Gain exclusive access to this article and all of the member benefits and investment education AAII offers.
JOIN TODAY for just $29.
Log in
Already registered with AAII? Login to read the rest of this article.

Register for FREE
to read this article and receive access to future articles.


No comments have been added yet. Add your thoughts to the discussion!

You need to log in as a registered AAII user before commenting.
Create an account

Log In