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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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