There has been a lot of hand wringing about the current rally in U.S. stocks, but the rally just got some major confirmation from the venerable Dow Theory, which flashed a buy signal for the first time in two years. Bulls can now be more assured that the current post-election rally is real and might last a good while longer.
The Dow Theory is one of the oldest rules for stock market behavior in the U.S. market. Its origins date back to as early as the end of the 1800s, although the details weren't fully published until 1932. The theory makes a great deal of sense for an industrial economy because it assumes that if goods are produced, they need to be shipped. Therefore, movements in the Dow Industrial Average (dating back to 1896) should be confirmed by the Dow Transportation Average (dating back to 1884 and originally referred to… Read More …