Home
Terms - Investing
Vote And Share
Calculators
Wise Igor Ansoff
Other Articles
WEB SITE CHAT
Beginner Investors
Value Investing
small cap articles
Mid Cap Stocks

the dow theory info


This theory - the dow theory is an idea of price movements and it is used as one of the founding ideas behind technical analysis. It was originally made from 255 wall-street journal editors. IT has six things that go along with it too make one theory.


1. The primary movement of the market follow a trend up or down that can last less than 12 months to many months or more than one year. During this period though the market may go up or down and retrace some of it's loss or gain.


2.These trends has 3 phases which they go through like this. There is a period when investors are buying stocks or selling them against the opinion of the market which is seen on the news and so on. Eventually rapid price change occurs.

3.The stock market goes along with the news which says that all investors are about equal in the market or the market is sort of efficient.

4.Market averages most make sense with each other. Basically one market index average can't be totally out of whack with another one or else it will fall or rise.

5. Trends are only usually right by volume when prices are moving but the volume is low there could be many reason as to why this is happening unless there are volume changes.

the dow theory is the reason for technicals and other theories CLICK HERE

Summing this theory up and it's efftect on investing in stocks?

Trends exist until signals show that they should be ending. Basically they will keep trending in a certain direction until evidence is present that is won't. Such as a bad economy and oil as an example. real estate Personally the dow theory I think is sort of right, but at the same time I don't think it is always right. If the dow market theory is always right would all be rich and that can't happen. However in my personal experience it does seem to be right in financial trend. However something nobody ever talks about in all this financial theory. Is it possible that these theories are partially right becasue people read them? Once they read them they may start acting on them and thereby effect the market and it's trends.