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Here are the main points of the Dow Theory:
1) Prime trend of the market can't be manipulated; 2) The secondary movement retrace 1/3 - 2/3 of the primary move, with 50% being the typical move; 3) The secondary moves tend to be faster and sharper than its preceding primary movement; 4) At the end of secondary movement, there is usually a dull peroid just before the turnaround, Little price movement, a decline on volumn, or a combination of these two marks the dullness; 5) Lows are sometimes accompanied by high-volumn washout day; 6) Each primary trend has three stages: accumulation/distribution, big move, excess, with the first stage being hardly identified by; 7) Volumn normally be heaver in primary trend and light in correction; 8) For the primary trend buy/sell signal to be valid, both $DJIA and $DJTA must be confirmed with each other; 9) The signal is mostly too late once the new primary trend is confirmed. |
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