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Finance: What is the Dow Theory? 11 Views


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What is the Dow Theory? Dow Theory is a collection of indicators and definitions of the types of market signals for indicating a Bull or Bear market (trend established for a year of more) or interim shorter trends, predicated on the Dow Jones Industrial Average and the Dow Jones Transportation Average both moving in a similar direction to validate the trend signal.

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Transcript

00:00

Finance allah shmoop what is dow theory Well it's a

00:07

push me pull you index Yeah like you know the

00:11

doctor do little lama thing with the overall average of

00:15

the dow thirty stocks here and the dow jones transport

00:19

index here where one goes well generally the other follows

00:23

that is they are highly correlated in price and one

00:27

is basically an indicator of where the other is heading

00:30

Why Well originally the dow transports were railroads which appalled

00:34

all the crap that the dow industrials made so you'd

00:37

think that one would follow the other And if the

00:40

push me pull you thing didn't work for you well

00:43

take a short look at this caterpillar crawling you know

00:46

like that one part goes forward and then the other

00:48

follows Well dow theory is one of a good gillian

00:51

black box crystal ball theories that charters tried to use

00:55

to predict how the stock market would run in the

00:58

future so that they could profit from those predictions And

01:01

like all other black box theories they work sometimes even

01:04

very nicely for a while with high prediction levels That 00:01:08.293 --> [endTime] is well until they don't No

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