When all is confusion, I turn to Dow Theory. The chart of the Dow below shows the Industrials yesterday breaking to new lows for the decline.
Note on the Transport chart below that the Trannies appear to be curling higher, but what is important and obvious that they did not plunge to a new low for the move during yesterday's action. Also, note the contracting blue histograms at the bottom of the Trans. chart. Contracting histograms moving up toward neutral-zero are a plus.
Note -- There are a thousand opinions being flashed across the wires regarding whether this market is bullish or bearish or whether it is even ready to crash. I'm trying to be as neutral and unbiased as possible here, because at this point the stock market is severely oversold and could do anything. I don't remember the last time the market was down seven weeks in succession, but if the market is down this week (and it looks as though it will), this would be a very rare seven-week decline. After seven weeks of lower prices, you'd think that this market would be ready to rally next week -- or it's a lot weaker than anyone suspects!
Below I show a weekly chart of the Dow. The last week is up to date as of Wednesday, but we don't know how this week will end. Note that the Dow has not closed below its March low -- yet.
