Schannep Capitulation Indicator
Capitulation as it relates to the stock market is when investors, speculators, whomever ‘throw in the towel’ because they are so disheartened, fearful, need to meet margin calls, or whatever. It is often called a ‘selling climax’ as stocks cascade down into a cataclysmic sell-off signals the stock market is in the throes of the Bear market’s bottoming. There have been 17 times since my database began in 1953 that this indicator signaled complete capitulation. Sometimes it is only a one day event but on most the status lasts for several days, if not weeks. The first day averaged within 5.0% (median 1.6%) and 12.5 days (median 2.5 days) before the bear market lows, 4 were on the actual low day, 4 were 1 day early and 1 was 2 days before the lows. (Only 6 times of the 18 capitulations was the low over 4% lower). The most recent occurrence was on April 8th, 2025, THE DAY OF THE LOW.
This IS an essential component of the Dow Theory for the 21st Century,
Bull and Bear Market Definitions
Wall Street typical defines each is a 20% gain (Bull) or a 20% loss (Bear) but that is too simplistic, a better definition is more logical and accurate. A 19% rise and a 16% decline are reciprocal numbers (+20% and -20% are not) and more accurate in identifying coming economic expansions and recessions. The defining levels must be reached on both the DJIA and S&P500. The most recent Bull market definition was met on July 3rd, 2025
This IS an integral component to the Dow Theory of the 21st Century.
The Schannep Recession Indicator
signals the economy is in the early stage of a recession when the three-month moving average of the National Unemployment Rate rises by 0.4 percentage points or more relative to the minimum of the three-month average of the previous cyclical lows. A better indicator than the “Sahm”, both failed in 2024. The data may be found at the Bureau of Labor Statistics. See Mark Hulbert’s recent MarketWatch article.
This NOT a part of the Dow Theory for the 21st Century.
All of the information on this page is FREE TO THE PUBLIC, and further details may be found at TheDowTheory.com or in my book available at Amazon and elsewhere.
