A few months ago I posted about the Dow Theory and how according to it at the time there was not yet anything to worry about. A link to that post can be found HERE.
In there I looked at the S&P500 and the Russell 2000 and whether they were breaking to new lows roughly at the same time. Well I've still been looking at them and since then, the picture has changed somewhat.
Again based on daily closing prices, the first index to break the lows (which incidentally is no longer the most recent significant low as I am still using the same lows of October 2014) was the Russell 2000.
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| 7 Days ago the Russell 2000 took out the October 2014 lows. |
And roughly at the same time (i.e. today), the S&P500 also broke to a new low... temporarily at least.
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| S&P500 pierced below the lows of October 2014 but managed to close above the level. |
Looking closer we see that the lows have not been broken yet, well, not entirely anyway.
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| Could it perhaps be the hammer of destiny? |
Well, ok then. So what now? I think we wait for the weekly candle to close on Friday and we look again once the weekly candles are formed and use those to tell us if this is the making of the greatest hammer formation I have ever seen, or, according to Dow Theory, is the beginning of the end of our 7 year bull market.
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