10 Dow Theory

Table of Contents

1. Dow Theory: Introduction

2. Dow Theory: The Market Discounts Everything

3. Dow Theory: The Three-Trend Market

4. Dow Theory: The Three Phases Of Primary Trends

5. Dow Theory: Market Indexes Must Confirm Each Other

6. Dow Theory: Volume Must Confirm The Trend

7. Dow Theory: Trend Remains In Effect Until Clear Reversal Occurs

8. Dow Theory: Dow Theory Specifics

9. Dow Theory: Current Relevance

10. Dow Theory: Conclusion

1. Dow Theory: Introduction

100

1900
1902

" " ( 1922 ), " "
 ( 1932 ) , Schaefer " 10,000

" ( 1960) " " (1961 )

Dow

( )



:
( ) 100

2. Dow Theory: The Market Discounts Everything

-
-

(



.)

3. Dow Theory: The Three-Trend Market

()
()
( .)

Figure 1: an uptrend

Figure 2: a downtrend

Primary Trend ( )

(

.)

Figure 3: an uptrend with corrections

(
Retracement
: .)

Secondary, or Intermediate, Trend ( )

( )

retracement

Figure 4: a secondary trend w/ a primary uptrend

retracement

DJIA 10,000 12,500
(2,500 ) DJIA 833
( 2,500)

Minor Trend ()

Figure 5

4. Dow Theory: The Three Phases Of Primary Trends

- (
)

( )

Primary Upward Trend (Bull Market) ( ( Market))
The Accumulation Phase ()

- .)
Figure 1: the accumulation phase

Public Participation Phase (

)



-
-

Figure 2: the public participation phase

The Excess Phase ( )

"
"

(


.)

Figure 3: the excess phase

Primary Downward Trend (Bear Market) ( ( Market))

The Distribution Phase (

)

( )



overbought oversold

Public Participation Phase (
)

The Panic Phase (

)

(
-
)
5. Dow Theory: Market Indexes Must Confirm Each Other

( )
( )



(

.)

6. Dow Theory: Volume Must Confirm The Trend

(
Oscillator
.)

7. Dow Theory: Trend Remains In Effect Until Clear Reversal Occurs

(

.)

8. Dow Theory: Dow Theory Specifics

Closing Prices and Line Ranges ( )



(
)

Signals and Identification of Trends ( )

(
Retracement : .)

( ) ( )
(
- and- .)

Figure 1: Upward Trend



Figure 2: Downward Trend

Figure 3: Upward Trend Reversal



Figure 4: Downward Trend Reversal

9. Dow Theory: Current Relevance

(
21 .)

) ( )
(

-
-





# 4:

10. Dow Theory: Conclusion

:
*

* Dow

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