Quotes from the Dow theory founding fathers on non-confirmations.

Robert Rhea – “A wise man lets the market alone when the averages disagree.”

Robert Rhea – “When the averages disagree they are shouting ‘be careful.'”

Robert Rhea – “The most useful part of the Dow theory, and the part that must never be forgotten for even a day, is the fact that no price movement is worthy of consideration unless the movement is confirmed by both averages.”

William Peter Hamilton – “In the study of the price movement, based upon Dow’s theory, so successfully applied in The Wall Street Journal for the last twenty years or more, it has been repeatedly found that the two averages must confirm each other to give an authoritative prediction.”

William Peter Hamilton – “Independent movements on previous experience are usually deceptive, but when both averages advance or decline together, the indication of a uniform market movement is good.”

William Peter Hamilton – “A new low or a new high made by the one (average) but not confirmed by the other, is almost invariably deceptive. The reason is not far to seek. One group of securities acts upon the other; and if the market for Railroad stocks is sold out, it cannot lift the whole list with it if there is a superabundant supply of the Industrials.”

William Peter Hamilton – “It seems a clear inference in a movement where the averages do not confirm each other that uncertainty still continues as concerns the business outlook.”

William Peter Hamilton – “The movement of both the railroad and industrial stock averages should always be considered together. The movement of one price average must be confirmed by the other before reliable inferences may be drawn. Conclusions based upon the movement of one average, unconfirmed by the other, are almost certain to prove misleading.”

William Peter Hamilton – “Dow’s theory stipulates for a confirmation of one average by the other. This constantly occurs at the inception of a primary movement, but is anything but consistently present when the market turns for a secondary swing.”

William Peter Hamilton – “When one breaks through an old low level without the other, or when one establishes a new high for the short swing, unsupported, the inference is almost invariably deceptive.”

William Peter Hamilton – “Indeed it may be said that a new high or a new low by one of the averages unconfirmed by the other has been invariably deceptive. New high or low points for both have preceded every major movement since the averages were established.”

William Peter Hamilton – “The two averages may vary in strength, but they will not vary materially in direction especially in a major movement. Throughout all the years in which both averages have been kept, this rule has proved entirely dependable. It is not only true in the major swings of the market, but it is approximately true of the secondary actions and rallies. It would not be true of the daily fluctuations, and it might be utterly misleading so far as individual stocks are concerned.”