Daily Market Commentary and Analysis

Currency Currents, our free daily blog, sent directly to your email box.

Your email:

Follow Us ...

Listen To This Blog

Our flagship newsletter, as a reader and subscriber to our BlackSwan blog you stay tuned-in to our current global-macro view and our analysis of key investment themes driving currency and commodity prices.

Nothing is off limits to us in this freewheeling look at the markets. But ultimately we have one goal in mind: to help you get a handle on the key investment themes driving global capital flow. Because if you know where the money is going, it increases the probability that your position in the market will be a profitable one.

The price tag may say 'FREE' ... but it's worth a heck of a lot.

Posts by category

Current Articles | RSS Feed RSS Feed

Dow Theory: Non-confirmation Warning with Aussie and Transports?

  
  
  

repetition“The game does not change and neither does human nature.”          

-Jesse Livermore

From the classic, Dow Theory, by Robert Rhea, 1932: :  

The movement of both the railroad and industrial stock averages should always be considered together. The movement of one price average must be confirmed by the other before reliable inferences may be drawn. Conclusions based upon the movement of one average, unconfirmed by the other, are almost certain to prove misleading.  

The most useful part of the Dow theory, and the part that must never be forgotten for even a day, is the fact that no price movement is worthy of consideration unless the movement is confirmed by both averages.  

022212 dow theory

Adding one more risk asset to the picture—Aussie-USD (brown line in chart below); it isn’t confirming either ...

022212 dow theory aud

... and the game plays on ...

Comments

Good that you alert us to this 
 
comparrison....so we never forget 
 
that confirmations are so important.....Thanks 
 
 
 
Ken
Posted @ Wednesday, February 22, 2012 7:13 AM by Ken Vogt
When does a pundit realize he is on the wrong train? 
 
Posted @ Wednesday, February 22, 2012 7:55 AM by august mezzetta
And the collapse of the Baltic Dry Index adds the exclamation point.
Posted @ Wednesday, February 22, 2012 2:42 PM by Collon Shandler
So ... are we only looking at increasing risk for the Aussie and Transport stocks - or more generally for the entire equities market? Dow, S&P, NASDAQ? 
 
 
 
And what does that imply for US Treasuries? How can rates possibly go lower? 
 
 
 
Posted @ Wednesday, February 22, 2012 3:19 PM by Brian
Grapsing at straws to view minor downward correction in AUD/USD as technically significant of anything. My view is that AUD is poised for new all-time highs against dollar. Generally bearish public views on AUD by most big banks very helpful in that regard.
Posted @ Thursday, February 23, 2012 3:18 AM by Cem Bond
Post Comment
Name
 *
Email
 *
Website (optional)
Comment
 *

Allowed tags: <a> link, <b> bold, <i> italics