The first buy signal has come from the centuries-old Dow Theory.

Critical Buy Signal from Dow Theory

Investment experts are evaluating new signals offered by a century-old indicator. Dow Theory stands out as an important analytical tool that has formed the basis of investment decisions in the markets for over 100 years. According to recent data, Dow Theory has issued a 'buy' signal for the first time in over a year this week. The significant impact of both the Dow Jones industrial and transportation indices making record closes on the same day contributed to this signal.

Strengthening Bull Market in the Markets

Technical strategists emphasize that despite fluctuations in AI stocks, the bull market that began in 2022 is based on solid foundations. This situation allows investors to approach long-term growth expectations with confidence. Market expert Ralph Acampora stated that this picture indicates the long-term bull market is progressing vibrantly and healthily.

Shift from Technology Stocks to Value Stocks

Recently, a rotation from technology stocks (especially Nvidia) to value stocks and cyclical sectors such as transportation has been observed. Chief market technician Craig Johnson noted that expectations of interest rate cuts have redirected investors' attention to these sectors. Johnson expressed that he anticipates stocks that missed the AI rally to perform well by 2026.

What is Dow Theory?

Developed by Charles Dow, Dow Theory is based on the symbiotic relationship between the industrial and transportation sectors. According to the theory, for a healthy upward trend to form, both sectors must support each other, meaning they must confirm the records. Experts argue that even if the companies within the indices change, the fundamental logic behind the theory remains valid.

Market Fluctuations and Investor Sentiment

However, the pullback in the markets following the buy signal also draws attention. Despite the positive signals on Tuesday, both sector indices tracked by Dow Theory closed with losses of over 0.9% on Wednesday. This situation indicates that investors' sensitivity to short-term fluctuations has increased.