Buy Signal

A valid buy signal requires the S&P 500 and either the Dow Industrials or Dow Transports to break above their respective secondary reaction highs. The S&P 500 must break above its secondary reaction high before a buy signal can be triggered. There is no buy signal if the S&P 500 fails to break its secondary reaction high, even when both Dow indexes do. An S&P 500 breakout alone is not sufficient for a buy signal. A buy signal begins from a bear market condition in which all three indexes are assumed to be making lower lows and lower highs.