This is what I said back on March 24, 2009 in the post titled Bear Market Rally:
This still holds true. Although the Dow sliced through its November 4th close with ease, the Transports have not. I think this is a significant tell, and I will not become a full fledged bull until it does. If the Transports take out 4071.81 on a closing basis before the Dow Industrials close below its August 17, 2009 close of 9135.34, then I'll flip. Simple as that.
It doesn't mean that I've been sitting on 100% cash the whole time. Not at all. I've been playing it safe with a nice cushion in cash (around 35%-65%), but using that cash to0 trade in and out of different positions. The two steps forward, one step backward approach. Also known as grinding it out. I don't see any great bargains out there anyway. In a perfect world, the Transports will give a confirming signal, the market will sell off significantly without giving a new Dow Theory sell signal, thereby allowing me to put a portfolio together that I can ride for a while. No way ,of course, it'll work out that way - it never does.
Anyway the November 4th close of 4071.81 is the Key close at this point in the Transports. Both indexes need to take out these significant highs for a Dow Theory Bull Market signal. One is not enough. Both are needed. They don't have to be made on the same day.
This still holds true. Although the Dow sliced through its November 4th close with ease, the Transports have not. I think this is a significant tell, and I will not become a full fledged bull until it does. If the Transports take out 4071.81 on a closing basis before the Dow Industrials close below its August 17, 2009 close of 9135.34, then I'll flip. Simple as that.
It doesn't mean that I've been sitting on 100% cash the whole time. Not at all. I've been playing it safe with a nice cushion in cash (around 35%-65%), but using that cash to0 trade in and out of different positions. The two steps forward, one step backward approach. Also known as grinding it out. I don't see any great bargains out there anyway. In a perfect world, the Transports will give a confirming signal, the market will sell off significantly without giving a new Dow Theory sell signal, thereby allowing me to put a portfolio together that I can ride for a while. No way ,of course, it'll work out that way - it never does.
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