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Home>UPDATE: September saw this rare -- and bullish -- trifecta for the stock market

UPDATE: September saw this rare -- and bullish -- trifecta for the stock market

UPDATE: September saw this rare -- and bullish -- trifecta for the stock market


By Mark Hulbert, MarketWatch

All three major Dow averages hit new all-time highs in September

CHAPEL HILL, N.C. -- If the most bullish thing the market can do is go up, the stock market could hardly be more bullish.

For the first time in over three years, each of the three major Dow stock market averages has just hit a new all-time high -- the Dow Jones Industrial Average , Dow Jones Transportation Average and Dow Jones Utility Average . This development is rare: It's happened in fewer than 4% of the months since 1970.

But here's the even better news: Never have any of these prior events occurred at a bull market top. The least bullish of any prior occurrences (which came in the spring of 2007) still came five months before a top.

To be sure, investors usually don't pay much attention to the Dow utilities. Most of us focus just on the Dow industrials. And among those who focus on Dow averages beyond the Dow industrials, most focus on just the Dow transports. That's because of the famous Dow Theory, the oldest market timing system that remains in widespread use today, which holds that joint new highs of both averages is confirmation that we're in a bull market.

That happened earlier this week, by the way, when the Dow transports finally surpassed its July high and joined the Dow industrials in new high territory. As Jack Schannep put it to me in an email, these joint new highs are "very encouraging." Schannep is editor of the (TheDowTheory.com), one of the Dow Theory oriented market timing services that I monitor.

But the late Richard Russell, who for decades edited the Dow Theory Letters advisory service, considered joint highs among all three Dow averages as a sort of "Super Dow Theory" bullish signal. The spring of 2007 was one of the last times before Russell's death when one was triggered. Even though he had been suspicious of the bull-market because valuations were so high, he wrote that, in his opinion, joint new highs of the three Dow averages dispels any doubt about which was the market was headed.

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