RICHARD RUSSELL: Here Are 2 Reasons Why I'm Not Buying The Latest 'Dow Theory' Buy-Signal

One of the oldest stock market phenomena that chart-watchers follow are the Dow Theory buy and sell signals.

The Dow Theory dictates that if the Dow Jones Industrial Average and Dow Jones Transportation Average are hitting highs (or lows) within a reasonably short time-window, it's time to buy (or sell).

Last week, the buy-signal was technically confirmed.

But Dow Theory expert Richard Russell remains unconvinced that it's really time to jump into (or jump deeper into) the market.

Writing on King World News, he says two other trends are giving him pause.

First, the NYSE advance-decline line is, "running into resistance at a triple-top," which he shows by the blue line in the following graph:

Secondly, he doesn't like what he's seeing out of the Dow's Utility Index, the significance of which he explains thusly:

"This average appeared in 1929, so it was never incorporated into classic Dow Theory.

"Nevertheless, the Utility Average has a history of topping out three months ahead of the rest of the market. Although, on occasion the Utilities have topped out simultaneously with the rest of the market. I show the Utility Average below, and it does indeed appear to have topped out."

Here's what he means:

Russell admits the buy signal could still very well be real given that markets are seemingly beholden to the Fed's influence.

But those two items have left him in wait-and-see mode: "I'm not going to go into the "why's" or "how comes" of the Fed's decision, let's just watch the market and see how it acts," he says.