Chapter 6. Dow Theory

Chapter Objectives

By the end of this chapter, you should know

• A brief history of the development of Dow Theory and the major contributors to this development

• The three Dow Theory hypotheses presented by Rhea

• The theorems of Dow Theory

• The three types of trends—primary, secondary, and minor—of Dow Theory

• The concept of confirmation in Dow Theory

• The role of volume in Dow Theory

• The criticisms of Dow Theory

Chapter Summary

Charles H. Dow was the founder of the Dow-Jones financial news service, the founder and first editor of The Wall Street Journal, and the first to create an index to measure the overall price movement of U.S. stocks. A. C. Nelson was the first to use the term “Dow Theory” in describing Dow’s ...

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