Dow Theory bearish for stocks

Dow Theory predicts a sharp move lower for the Dow Jones Industrial Average over the next few months, according to Andy Dodd, Head of Technical Research at Louis Capital Markets.

Dodd presents a simple chart that shows how the DJIA and the Transportation Index have largely mirrored each other over the last year or so, but the recent price action has led to a large disparity. He says, “If Dow Theory proves correct then a sharp move lower over the next few months in the former [DJIA] would still seem imminent.”

See chart.

See full report, including an analysis of the following equity, currency and bond markets:

S&P 500
Russell 2000
Dow Jones 30
DJ Transportation Index
US 30 Year Bond Yield