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DOW THEORY UPTREND IS CONFIRMED

John Murphy

John Murphy

Chief Technical Analyst, StockCharts.com

Dow Theory holds that the Dow Transports and Industrials must both hit new highs to confirm an ongoing bull market. The ability of the Dow Industrials to exceed their January high has done just that. That doesn't tell us how far the bull market will run, or for how long. It just confirms that a bull market still exists. The Dow has been a laggard for several months and is one of the last indexes to hit a new high. [The NYSE Composite also hit a new high last week]. A lot of this week's Dow strength can be attributed to upside breakouts in some key components.

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DOW LEADERS... The Dow's ability to finally hit a new high is largely based on the strong price of the five stocks shown below. All have rallied to 52-week highs over the last week. In order of relative strength, they include General Electric, DuPont, Cisco, Intel, and Wal Mart. Although Wal Mart has been a laggard for sometime, all five stocks are doing better than the Dow during the first three months of the new year.

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John Murphy
About the author: is the Chief Technical Analyst at StockCharts.com, a renowned author in the investment field and a former technical analyst for CNBC, and is considered the father of inter-market technical analysis. With over 40 years of market experience, he is the author of numerous popular works including “Technical Analysis of the Financial Markets” and “Trading with Intermarket Analysis”. Before joining StockCharts, John was the technical analyst for CNBC-TV for seven years on the popular show Tech Talk, and has authored three best-selling books on the subject: Technical Analysis of the Financial Markets, Trading with Intermarket Analysis and The Visual Investor. Learn More