Last-Resort Sell Signal

In this setup, the market continues declining instead of pulling back, rallying, and then breaking down. The last-resort sell signal is less favorable than the standard sell signal because it usually happens at a lower price level. The alternative sell signal is generated when the market declines from the highs without at least a 3% rally and violates the lows of the last completed secondary reaction. The alternative sell signal also requires confirmation across the three indexes. The last-resort sell level is based on the lows of the last completed secondary reaction in both Dow averages. A confirmed last-resort sell signal occurs when both Dow Industrials and Dow Transports break below the projected lows. An alternative sell signal can occur when the market falls directly from its highest highs without the usual pullback-and-rally structure. A last-resort sell signal applies in a bull market when prices fall continuously without forming the normal sell-signal pattern.