| October 21, 2016 at 01:00 PM
10.5 SuperList:
By popular demand, we have added a chart based on the work of Charles H. Dow who was not only the founder of Dow Jones & Co. but also the first editor of the Wall Street Journal. His work based on the hundreds of editorials he wrote came to be known as the Dow Theory. The logic being that if manufacturers’ profits are to go up, they must not just produce more goods but must ship more goods as well. As investors look for signs of a healthy economy and therefore a profitable stock market uptrend, they should ascertain if the Dow Industrials Index uptrend is confirmed by the Dow Transportation Index.
On our updated Dow Theory chart, we included not only the Dow Industrials Index but the Dow Transports Index, as well as the four Dow transportation industry groups which are rails, trucking, air freight and airlines. (Chart available for StockCharts subscribers only)
There has been renewed interest in the Dow Theory since Jack Schannep presented his research to the Market Technicians Association that showed Dow Theory produced an excess return of 1.5% per year (from 1953 thru 2011) versus a buy and hold strategy. His presentation attracted a whole new generation of Dow Theory enthusiasts.