A Rare Development in the Stock Market

An unusual event occurred in the market during September. For the first time in more than three years, each of the three major Dow stock market averages all hit all-time highs during the month. The central tenet of the venerable "Dow Theory" is that a new high by one of the indexes, traditionally the Dow Industrials, is considered very bullish if confirmed by the Dow Transports and even more bullish if the third (the Dow Utilities) joins in.

The late Richard Russell, long-time proponent of the Dow Theory, called this a "Super Dow Theory" signal. This is a very rare development, happening in less than 4% of months since 1970.

Encouragingly, never have any of these prior events occurred at a bull market top. And the worst performance of any prior occurrence (spring of 2007), still came five months before the eventual top.
So, at the worst, the market appears poised for a continuation of market gains for at least a while. Market statistician Mark Hulbert compiled the statistics into the following table:

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