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Dow Theory: Presented By: Khushboo Bhatt

The Dow Theory hypothesizes that stock markets move in long-term primary cycles driven by economic conditions, along with intermediate secondary cycles and short-term minor fluctuations. It identifies primary trends lasting years that drive markets up or down, secondary trends lasting weeks to months that restrain the primary trend, and minor daily fluctuations with little analytical value. The theory uses movements in both industrial and transportation stock averages to determine whether the overall market trend is bullish or bearish.

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Khushboo Bhatt
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46 views

Dow Theory: Presented By: Khushboo Bhatt

The Dow Theory hypothesizes that stock markets move in long-term primary cycles driven by economic conditions, along with intermediate secondary cycles and short-term minor fluctuations. It identifies primary trends lasting years that drive markets up or down, secondary trends lasting weeks to months that restrain the primary trend, and minor daily fluctuations with little analytical value. The theory uses movements in both industrial and transportation stock averages to determine whether the overall market trend is bullish or bearish.

Uploaded by

Khushboo Bhatt
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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DOW THEORY

PRESENTED BY:
KHUSHBOO BHATT
HYPOTHESIS

The stock market does


not perform on a random
basis but is influenced
by three distinct cyclical
trends that guide its
Hypothesis was given by

CHARLES H. DOW
Dow classified these cycles
as
Primary trends.
Secondary trends,
Minor trends.
PRIMARY TRENDS

Primary trend is a long


range cycle that carries
entire market up and down.
SECONDARY TREND

The secondary trend acts as a restraining


force on primary trend. Tending to
correct deviations from its general
boundaries.

Secondary trends usually last from several


weeks to several months in length.
MINOR TREND

The minor trend are the day to


day fluctuations in the market.
These have little analytical value
because of their short duration
and variations in amplitude.
Primary and secondary trends

Secondary trend

Primary
trend
A bull market is in process when
successive highs are reached after
secondary corrections and when
secondary upswings advance beyond
previous secondary upswings.

The theory also requires that the


secondary downswings corrections
The reverse of these proposition would be
true of a bear market.

The classical DOW THEORY utilizes


both the industrial average and
transportation average in determining
the market postion. When both the
averages are moving in the same
direction, valid indicators of a
THANK YOU!!!!!

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