3
DOW THEORY
Answers
1. B.
2. D.
3. C.
4. H.
5. C.
6. B. Dow theory tends to give whipsaws in strong secular bull markets.
7. C. The Industrials trigger a sell signal, but the Transports continue to trace out a line formation. When the price breaks below the lower level of the line, a confirmation is given and a Dow theory bear market is confirmed.
8. B.
9. C. Volume is a background factor used to help interpret market turning points; it is not an integral part of the theory.
10. B. Dow theory offers just one piece of evidence that the trend has reversed. It certainly does not guarantee that a new primary trend is unfolding, and definitely does not forecast the magnitude and duration of the next one. This is because there is no known method of ...
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