Dow theory

[miskec]

The Dow Theory has been around for almost 100 years, yet even in todays volatile and technology-driven markets, the basic components of Dow Theory still remain valid. Dow Theory was formulated from a series of Wall Street Journal editorials authored by Charles H. Dow from 1900 until the time of his death in 1902. These editorials reflected Dow’s beliefs on how the stock market behaved and how the market could be used to measure the health of the business environment.

Due to his death, Dow never published his complete theory on the markets, but several followers and associates have published works that have expanded on the editorials. Some of the most important contributions to Dow theory were William P. Hamilton's "The Stock Market Barometer" (1922), Robert Rhea's "The Dow Theory" (1932), E. George Schaefer's "How I Helped More Than 10,000 Investors To Profit In Stocks" (1960) and Richard Russell's "The Dow Theory Today" (1961).

Dow believed that the stock market as a whole was a reliable measure of overall business conditions within the economy and that by analyzing the overall market, one could accurately gauge those conditions and identify the direction of major market trends and the likely direction of individual stocks. Much of what we know today as technical analysis has its roots in Dow’s work. For this reason, all traders using technical analysis should get to know the six basic tenets of Dow Theory.

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[TheBramble]

miskec, could you just point out how the basic tenets of Dow Theory have held over the last 20 years?

Thanks.

 

[miskec]

sry, i didnt really understand your question, dow's theory was first introduced at the beginning of the last century, and has more or less stayed the same, so did the tenets.

 

[TheBramble]

So you're saying you're quite happy to accomodate Dow theory as initially posited over 100 years ago against market action today with all the developments in the markets and trading and the internet and low cost brokerages and on-line trading and derivativbes and exotics that could not have been dreamed of in Charles Dow's day and the changing geo-political power-shift over the last 100 years

You can see how the theory still fits - with all those changes? Is that what you're saying?

 

[ntb10071981]

i think that is what he is saying.

 

[StockHunter]

I find that most of the time old theories/sayings still apply no matter what day and age we are in.

 

[rathcoole_exile]

is there a particular reason that your message about Dow theory was posted in the forex discussion thread ?
odd, when Retail forex trading as we know it was largely unheard of when Dow was around.
Are you suggesting that the tenets of Dow theory can be applied to the modern-day forex markets with equal effectiveness ?

 

[StockHunter]

Yeah it is odd that you post Dow theory in a forex thread. I wouldn't think dow theory would apply to forex markets because dow theory was ment for US stocks.