Believe it or not, technical analysis is one of the oldest forms of trading and investing in the market.

Go back a couple hundred years and a Japanese rice merchant was using make shift charts to speculate on the price of rice.

But the modern form of technical analysis that we know today -- trends, charts, market cycles, etc -- comes largely from Mr. Charles Dow.

You see.. in the late 1800s Dow built the Dow Jones Transportation Average (DJTA) as a way to get a better understanding of how all of the most important railroad stocks were doing.

A few years later, he built the Dow Jones Industrial Average (DJIA) as well.

His idea was that if the transportation average and the industrial averages were moving in the same direction, the market was acting efficiently.

If both were rising, he would be buying stocks. If both were falling, he would be selling stocks.

Whether that was up or down.. it didn't matter. He only sought confirmation.

And yesterday.. after three long years, Dow Theory as it's become to be known.. confirmed.

Dow Theory Confirmation

The DJIA has performed well this bull market cycle.

Since breaking out into new all-time highs back in late December 2023, the DJIA has gained just under 35%.

Here's what that looks like as of yesterday's close:

But what got many old school Dow theorists hung up over the last few years was that the DJTA was not confirming the breakout..

Meaning the Transport stocks were not breaking out along with the Industrial stocks.

And in Dow's world, that meant trouble.

For the last three years, Dow Theorists lamented over whether or not the primary uptrend was durable. That all changed yesterday.

Here's what the DJTA looks like this morning:

Finally. Confirmation.

Historical Precedence

If you put yourself in Dow's shoes back in the late 1800's, the Dow Theory would probably make a lot more sense.

Dow said that if the economy was doing well, the railroads would be packed and businesses would be manufacturing products.

On the other hand, if the economy was slowing, the railroads would understandably slow down and businesses would slow the supply of products.

It's when one of the two started to diverge from the other that caught Dow's attention. It meant something may be afoot. And that's exactly what the market has been trading like over the last three years.

It may sound too simple. But the data suggests that this powerful confirmation leads to continued primary uptrends across the market.

Here's a great chart by SubuTrade on X illustrating the S&P 500 forward returns going out 1-year after both the DJIA and DJTA hit all-time highs for the first time in more than 1 year:

Going back to 1927, the S&P 500 has been positive 100% of the time 9 months later and 85% of the time 12 months later with an average return of over 12%.

It's important to note that this is not a signal.. this is confirmation of what we're already seeing out there across the market.

Yesterday we talked about the amount of uptrends versus downtrends we counted as a community inside of TTI during our Monthly Market Blueprint on Monday.

There were so many uptrends that it was almost undeniable that this market was poised higher. And here we are, today, with the S&P 500 at all-time highs.. the equal weight S&P 500 at all-time highs.. the Financial and Industrial sector at all-time highs.. you get the picture.

The primary uptrend remains alive, strong, and robust. It's your job to trade it and make as much money as you can in the process.

You still have time to join us. This morning we're going live for our Execution Report. We're going to be covering all of the most important charts this week, managing our portfolios, and going through new trades.. all live.

You can find all of the information here: https://docs.google.com/document/d/1IHn3NaLaV460Qi2Ju08nZLthlxTCZcnujx8R0NeBgvQ​

I'm excited to be going through this with you folks.

And remember..

Don't fight the trend!

Profits Over Prophets,

Hamilton