Dow Theory flipped to a bearish signal
Dow Theory flipped to a bearish signal: Sevens Report Analysts Quoted in Investing.com
Warning: ’Dow Theory’ flips from bullish to bearish for first time since July 2023
According to the Sevens Report, Dow Theory flipped to a bearish signal on March 14, ending a bullish stretch that began in July 2023.
“A bearish reversal in Dow Theory effectively means that the bull market off the October 2022 lows has either ended or is in the process of ending,” the report said. While the S&P 500 remains near multi-week highs, the signal implies rising downside risks as macro uncertainty builds.
The system has a reputation for lagging but historically offers “a relatively high conviction bullish or bearish call for the primary trend in the stock market once a reversal is ‘confirmed’,” Sevens Report explained.
Importantly, Sevens Report stresses that the signal is not just a technical indicator. “If everything is priced in and both the Dow Industrials and Dow Transports have or are in the process of falling into technical downtrends, then the economy is very likely already in contraction and falling into recession, based on history.”
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