Earlier this year, the transports reconfirmed the bull trend by zigzagging higher, just as the industrials had done. May. On current numbers, a drop by the industrials to a daily close below 10,000 while transports hold below 2,800 will be another downward signal. Charts are the easiest way of viewing Dow Theory swings, with The Wall Street Journal's charts each day showing a six-month view of the Dow averages. Earnings are one indicator that won't tell you the bull market is over. The fact is that profits continue to rise because the stock market looks ahead.
Stock prices drop before profits start to drop.
They also start rising before profits do, so don't look to profits to catch an early ride on the next bull, either. Carlyle Dunbar, former news and investment editor at The Financial Post, is now a freelance business journalist. We welcome your feedback. All rights reserved.