AlphaDow Barometer: Dow Theory Bear signal last Monday. AD Bearish since July 1st.

Sean Gallagher Has Had Over 50 Followers Rank: 24 Followers: 59 Votes: 30 Years Member: 7 Last Update: 31 August 2015, 10:33 Categories: ETFs
General Market Commentary
Canadian Stocks

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Orthodox Dow Theory gave a bearish signal last Monday when the Industrials put in a daily close below 16,117.24 and the Transports closed below 7,717.69.

The Call For The Week of August 31st:

Stocks swung wildly in both directions this past week beginning with a 1,000-point plunge in the Dow Jones Industrial Average minutes after Monday morning's opening bell. Oil soared late in the week while safe havens gold and bonds cooled off. We may not have witnessed complete capitulation so investors should be patient while nimble traders should reduce exposure purchased this week.

AlphaDow is a 100% mechanical Intermarket Strategy consisting of three trend following indicators, one breadth and one based on interest rates. Add up the numbers in the dots in each indicator pane. A new BULLISH state will occur when the count reaches 5 out of 5.

We turned BEARISH on the U.S. stock market (as of July 1st when the count went to 2 out of 5). We will remain in a BEARISH state until the count reaches 5 out of 5.

We turned BEARISH on the Canadian stock market (2 out of 5) as of the 5th June '15.

We turned BEARISH on Gold as of July 2nd '15.

We turned BULLISH on Bonds (TLT) as of July 27th

The Dow Theory is a form of technical analysis that relies on detecting trends in the stock market to determine an investment strategy. The detection of these trends may be interpreted differently by different analysts and the opinions expressed on this website may not be shared by other individuals who apply the same principles of Dow Theory. Past performance is not an indication of future returns. It should not be assumed that any recommendations made will be profitable or without the risk of loss.

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1. AlphaDow -- Five points possible. 5=BUY 2=SELL. Use SPY or the strongest (Alpha) ETFs.

Bullish when 5 out of 5 are true (+1):

$SPX is trending up (trend is up)

Advance/Decline Line is trending up (buying power)

$TRAN is trending up (Dow Theory confirmation)

Utility Average MA rises (interest rate sensitive)

Bonds are trending up (interest rates are low)


74% winning trades (13/18) since 1970. Beats buy and hold with less volatility.

Past performance is no guarantee of future results. This is not investment advice, but is for educational purposes only. Consult your investment advisor for additional information regarding suitability, fees, expenses and short term trading costs.

2. AlphaDow TSX -- 'Canadian Dow Theory' -- send feedback for ETF Focus List

Bullish when 5 out of 5 are true (+1). Stay invested until 3 turn false (+0).

$TSX is trending up (trend is up)

Advance/Decline Line is trending up (buying power)

$TRAN is trending up (Dow Theory confirmation)

Utility Average MA rises (interest sensitive)

Bonds are trending up (interest rates are low)

67% winning trades since 1980 - beats buy and hold with lower volatility. Buy and Hold the strongest ETFs or stocks when in BULLISH state. Otherwise hold cash or bond proxy.

Past performance is no guarantee of future results. This is not investment advice, but is for educational purposes only. Consult your investment advisor for additional information regarding suitability, fees, expenses and short term trading costs.

3. AlphaGold - Intermarket System 3=BUY, 1=SELL (GLD or GDX)

Bullish when all three systems are on a BUY. Score +1 for each of the following TRUE statements:

1. US Dollar Index 12 wk EMA

2. Oil > 12 wk EMA

3. Dow > 48wk EMA

Buy Gold (GLD) if score is +3 (all three TRUE). Stay invested (long GLD or GDX) until 2 systems turn false (0).

14.8% CAGR with 13.8% max drawdown 1954-1995. *Source: Wall Street Journal - Divining Gold's Next Move 2006

Past performance is no guarantee of future results. This is not investment advice, but is for educational purposes only. Consult your investment advisor for additional information regarding suitability, fees, expenses and short term trading costs.

4. AlphaBond - Intermarket System 3=BULL, 1=BEAR (TLT)

BULLISH on TLT when 3 systems are on BUY. BEARISH when count drops to 1 :

1. Fidelity Financial RS is positive = +1

2. Utility RS is positive = +1

3. Chemical RS is negative = +1

4. Nickel ROC is negative = +1

Financial assets and utilities lead. Inflation is bad for bonds. Source: Formula Research Intermarket Bond Strategy.

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