THE CONCEPTS OF DOW THEORY WAS INTRODUCED BY CHARLES H .DOW THEY WERE ACTUALLY ARTICLES THAT WAS WRITTEN BY DOW IN THE EDITORIALS OF “WALL STREET JOURNAL”.IT WAS LATER COMPILED BY P.HAMILTON AS DOW THEORY.
IT IS HIGHLY USEFUL FOR LONG TERM INVESTMENTS .TWO YEARS DATA IS TAKEN AND ANALYSIS IS DONE WITH THE HELP OF LINE CHARTS .DOW THEORY IS BASED ON CERTAIN PRINCIPLES WHICH ARE AS FOLLOWS:
1.MARKET INDICES DISCOUNTS EVERYTHING
2.THERE ARE THREE MARKET TRENDS PRIMARY,SECONDARY AND MINOR TRENDS
PRIMARY TREND :THIS IS THE MAJOR TREND IT LASTS FOR A YEAR OR MORE.ACCORDING TO DOW THE PRIMARY TREND CANNOT BE MANIPULATED.
SECONDARY TREND: SECONDARY TRENDS ARE THE CORRECTIONS TO THE PRIMARY TREND.THEY LASTS FOR A FEW WEEKS TO FEW MONTHS..SECONDARY MOVES ARE FASTER AND SHARPER THAN PRIMARY MOVE..
MINOR TRENDS ARE THE DAILY FLUCTUATIONS IN THE MARKET.THEY EITHER MOVE WITH OR AGAINST THE PRIMARY TRND .THEY LASTS FOR A FEW HOURS TO FEW DAYS BUT NOT MORE THAN A WEEK
3.ALL INDICES SHOULD CONFIRM WITH EACH OTHER
4.VOLUME MUST CONFIRM WITH TREND.
IN SPITE OF ALL CRITICS DOW THEORY STANDS AT THE TOP TO THE SAYING “OLD IS GOLD”
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