Russell, Schannep and Moroney examined.
But, as you can read here the Dow Theory is not math, and hence it is subject to interpretation, which results in different "flavors." To get a basic idea about the different "Dow Theory flavors," please click here.
Dow Theorist Richard Russell has been bearish since time immemorial. He tends to be aligned with the secular trend, and hence he's had a bearish stance for a long time. When he was just about to turn bullish, the declines suffered by the market two weeks ago made him revert to a full bearish outlook. All in all: For Russell, the market is in a primary bear market and the price advance witnessed from June 4 to Sept 14 was merely a secondary reaction within a primary bear market.
Richard Moroney is the editor of the "Dow Theory Forecasts." Until now, he was bullish but now it seems he is turning bearish. You can read more about his stance here.
However, it should be stressed that the "Dow Theory Forecasts," unlike Russell or Schannep or this blogger truly yours, is not exclusively focused on the Dow Theory. And you know the saying: "Cobbler stick to your trade."
Schannep is unambiguously bearish. He was bearish some days before I myself declared the existence of a primary bear market. If you follow this Dow Theory blog assiduously you know that I regard Schannep as a leading Dow Theorist. He's a focused Dow Theorist, and his market calls tend to right more often than not. Or to put it bluntly: Those following him have made money and you know the saying (again a saying): "Money walks, B* talks"
Therefore, there seems to be unanimity among Dow Theory practitioners. However, I'd say that this unanimity is more the result of chance than real agreement as to the tools and principles applied, since time frames and interpretation of the Dow Theory differ substantially among them.
Of course, if we take the secular view, I agree with Russell. The S&P is still below the level it reached in 1999. This is clearly a secular bear market for me. However, between 1999 and 2012 we have had several cyclical bull and bear markets and some of these cyclical bulls (spotted by Schannep and even Russell in some instances) were profitable for investors.
If we focus on a somewhat shorter time frame (i.e. 1 year), I also agree we are now in a primary bear market. So we are undergoing a cyclical bear market within a secular bear market. So the agreement between Dow Theorists must be nuanced. Now we all agree as to the using the word "bear". However, some Dow Theorists have reached this conclusion from a secular time frame whereas others have applied a shorter time frame.
What should the investor do? As I have written before, I personally tend to ignore the secular trend and, like Schannep, I feel comfortable spotting cyclical bull and bear markets. This implies a time frame of ca. 1-2 years, which is long term enough not to be a short term trader but short term enough not to be a "buy and hope," sorry, "buy and hold" investor. The secular trend is important, though: It helps me determine the total amount of capital to be committed to stocks. In a secular bull market like the nineties, I'd feel comfortable with an 80% allocation to stocks. Under a secular bear market, I'd decrease my commitment even under a cyclical bull market. Capital allocation and portfolio composition is the subject for a future post on this Dow Theory blog.
Have a wonderful weekend.
The Dow Theorist.