The Dow Jones Industrial Average tumbled 424.69 points Friday to close at a four-month low of 23,533.20.
What makes the decline technically very significant is that closing below the Feb. 8 closing low of 23,860.46 completes half of the final step needed to trigger a Dow Theory sell signal, as MarketWatch senior columnist Mark Hulbert explained.
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The Dow Theory is a market timing tool that has been relevant on Wall Street for a century. With the Dow DJIA, -1.77% closes at a lower low, after a lower high, all that’s needed to trigger the sell signal is for the Dow Jones Transportation Average DJT, -1.84% to close below its Feb. 9 closing low of 10,136.61.
The Dow transports finished Friday down 190.14 points at 10,163.32, meaning just a further decline of about 26.71 points, or 0.3%, would be enough for the bearish signal.
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