Has Dow-theory signalled the end of bear-market?

#1
Hello everyone,

I am very new to stock markets and learning the basics of Technial and Fundamental analysis. My hello to all you guys and hope to learn and share knowledge with you along our journey.

As I understand the Dow-Theory, it is called the "bread and butter" of technical analysis. Although being very simple and having some limitations, it is still the only method in use that has stood the test of Time. I have one question regarding Dow theory to the experts among you: Has the dow-thoery given a positive signal or a bull market.

One basic tenet of dow theory is that it considers only the closing price for determining the primary direction/trend and not the intraday fluctuations. Hence i've taken the chart of closing prices of Nifty from Jan-2008 to Jan-2009 as follows:

Dow.GIF


The theory states that in order to signal a bull-market price should make a higher-high and a higher-low. As we can see in the above diagram, until 27th- October (new year/vikram-samvat), the sequence was exactly the opposite (lower-highs and lower-lows) signalling a bear-market. However, since then on 20-Nov, the Nifty proceeded to make a higher low instead of lower low. My doubts are as follows:

1) A higher-high formation is yet to be made. If it is formed by breaking the 10-nov high of 3148 (and the low of 2553 is not broken), could a bull-market be signalled?
2) Could a bull-market be signalled even before that considering that the low of 27-oct is not broken?

Thanks in advance.

Cheers :)

Prahlad
 
#3
I think the weekly looks even better. I could only get a candlestick for the weekly and I think since L4 of 2259 on 31-oct it is forming an ascending triangle on the weekly. am i right?

DOW1.GIF
 

prasadam

Well-Known Member
#4
Hello everyone,

I am very new to stock markets and learning the basics of Technial and Fundamental analysis. My hello to all you guys and hope to learn and share knowledge with you along our journey.
.....

Hence i've taken the chart of closing prices of Nifty from Jan-2008 to Jan-2009 as follows:

View attachment 10914


The theory states that in order to signal a bull-market price should make a higher-high and a higher-low. As we can see in the above diagram, until 27th- October (new year/vikram-samvat), the sequence was exactly the opposite (lower-highs and lower-lows) signalling a bear-market. However, since then on 20-Nov, the Nifty proceeded to make a higher low instead of lower low. My doubts are as follows:

1) A higher-high formation is yet to be made. If it is formed by breaking the 10-nov high of 3148 (and the low of 2553 is not broken), could a bull-market be signalled?
2) Could a bull-market be signalled even before that considering that the low of 27-oct is not broken?

Thanks in advance.

Cheers :)

Prahlad
Don't you think Nifty made higher lows (even higher highs) during March-May and July-sept. ? If so, even then Nifty continued its downward journey.

If Nifty closes above 3148 as mentioned by you, we may consider it as an intermediate uptrend but not end of bear market.

My views only.

for further clarifications on the subject refer the following thread.

http://www.traderji.com/technical-analysis/6072-teach-man-fish.html
 

prasadam

Well-Known Member
#5
I think the weekly looks even better. I could only get a candlestick for the weekly and I think since L4 of 2259 on 31-oct it is forming an ascending triangle on the weekly. am i right?

View attachment 10915
If we see weekly, nifty broke the channel L1,H1,.. L3 H3 on the downside during OCT 2008 and is now trying to enter the channel (i.e. channel as drawn by you). unless nifty breaks the channel on the upside , we can't consider an intermediate uptrend , forget about the end of bear market.


My views only.

By the way why are you not considering the lows of Jan and Oct. while drawing trendlines?

For a discussion on ascending triangle see this thread.

http://www.traderji.com/equities/25846-pivot-triangle-breakout-nifty.html
 
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