Sri Lanka Equity Forum
Dear Reader,

Registration with the Sri Lanka Equity Forum would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
Sri Lanka Equity Forum

Discussion Forum for Stock Market Investors in Sri Lanka

සිංහල පරිවර්තනය
Submit Post
Submit Post
Market Place

Add an ad

View all ads

Latest topics

» Why we should buy AEL.N0000…?
by arun.cse Today at 1:27 pm

» Market will test 4700
by karuna2 Today at 1:08 pm

» Loss-making stockbrokers may not last six months
by Miss-Sangeetha Today at 12:51 pm

» lOFC definitely will hit 6/-
by nuwanmja Today at 12:39 pm

» Those who are having SUGA And HDEV (Hotel Developers)coming week you all can excpect Good News to come
by Capton KIng Cool Today at 12:25 pm

» MGT.N0000 & TJL.N0000 keep eye.
by arun.cse Today at 10:54 am

» Why AAIC Should trade above RS.50/-
by arun.cse Today at 10:11 am

» ECL wAS 2.8 Last week Today 4.7 .Whats Next? Acme?
by Capton KIng Cool Today at 9:02 am

» If i am the EPF buyer,I will go for PLC
by Teller Today at 12:52 am

» BFN බොරු සෙලින් දාලා කොහොම හරි 11 වගේ ගානට 500000 එකතු කරගන්න කියලා අර 14 ට ලක්ශයක් සෙලින් දැම්මේ මේ ටේලර් මහත්තයාම තමයි
by Teller Yesterday at 11:00 pm

» IDL IDL IDL
by Teller Sat Jun 15, 2019 6:18 pm

» RICH is not bad @ 9/-
by Teller Sat Jun 15, 2019 2:52 am

» Look APLA its trending to 98LKR
by Teller Sat Jun 15, 2019 2:24 am

» WATA future looks good
by Teller Sat Jun 15, 2019 2:16 am

» SAMP Oversubscribed?
by Teller Sat Jun 15, 2019 2:13 am

» Apple Lost Sales in Europe to Chinese Firms Ahead of US Huawei Crackdown
by Teller Sat Jun 15, 2019 1:44 am

» Market is On The Rise.Market PER 8.5, EPF Has entered the market curently they are buying AEL (Access Enginering)There'r lot of counters. Rich,TkyoAsir,Amsl,Osea.CINV.EXPO,JINS and Tyre.good luck
by wisdom79 Fri Jun 14, 2019 7:55 pm

» Keep eye on Politics
by samaritan Fri Jun 14, 2019 1:06 pm

» NEXT RUN People's leasing and Finance WAIT AND WATCH ENJOY RIDE..
by ddrperera Thu Jun 13, 2019 9:25 pm

» EPF Investment in Unquated copmanies .Who is responsible Previous Centeral Bank Governer and Former Regime.
by Capton KIng Cool Thu Jun 13, 2019 9:05 am

» PDL (Property Development)
by Capton KIng Cool Thu Jun 13, 2019 8:51 am

» EAST Steady at 18
by Cricketman Thu Jun 13, 2019 5:28 am

» Guys what happen these days
by Yahapalanaya Thu Jun 13, 2019 2:29 am

» its right time to buy PHAR@700
by Teller Thu Jun 13, 2019 12:50 am

» Look PAP Amazing company
by Teller Thu Jun 13, 2019 12:46 am

» Sri Lanka stocks end at near 1-month high on local buying; rupee gains
by Teller Thu Jun 13, 2019 12:33 am

» Maharaja ASI
by karuna2 Wed Jun 12, 2019 9:36 pm

» From 10th Onward no more Phillip only Asha securities lts before login go to setting and remove phillip and aply then it will work Good luck
by Yahapalanaya Wed Jun 12, 2019 5:25 pm

» ALHP WILL MOVE UP from next MONDAY
by Teller Wed Jun 12, 2019 4:20 pm

» PDL revised exit offer
by krishna Wed Jun 12, 2019 10:55 am

» ASHAPHILLIP SECURITIES
by Yahapalanaya Wed Jun 12, 2019 9:42 am

» Will CTC be effected?
by Yahapalanaya Wed Jun 12, 2019 6:48 am

» Guys Look for DPL@5.20
by Teller Wed Jun 12, 2019 2:36 am

» AEL GOOD BUY
by wisdom79 Tue Jun 11, 2019 8:47 pm

» Colombo Bourse reports the ‘Second Lowest Daily Turnover’ for the year 2019
by Miss-Sangeetha Mon Jun 10, 2019 8:25 pm

» What a Joke? who will invest in Sri lanka?
by Teller Sun Jun 09, 2019 7:30 pm

» senior citizen Interest Subsidy arrears of 33 billion rupees
by samaritan Sat Jun 08, 2019 11:48 am

» Dhammika also resposible this
by samaritan Sat Jun 08, 2019 9:47 am

» COLO.N https://www.cse.lk/home/company-info/COLO.N0000/announcementsNew
by Yahapalanaya Sat Jun 08, 2019 2:08 am

» Dark times - Sampath Bank
by samaritan Fri Jun 07, 2019 1:03 pm

» AAIC will kill investors money within 15 years
by wisdom79 Fri Jun 07, 2019 12:21 pm

» I couldn't log from Dubai
by Teller Thu Jun 06, 2019 7:12 pm

» Sri Lanka stocks extend fall despite rate cut in thin trade; rupee steady
by Teller Thu Jun 06, 2019 7:10 pm


You are not connected. Please login or register

Sri Lanka Equity Forum » Stock Market & Forum Help » Stock Market Charts & Graphs » Six basic tenets of Dow theory

Six basic tenets of Dow theory

Go down  Message [Page 1 of 1]

1Six basic tenets of Dow theory Empty Six basic tenets of Dow theory on Mon Mar 12, 2012 7:51 pm

godfreydayan


Equity Analytic
Equity Analytic
1.The market has three movements
(1) The "main movement", primary movement or major trend may last from less than a year to several years. It can be bullish or bearish. (2) The "medium swing", secondary reaction or intermediate reaction may last from ten days to three months and generally retraces from 33% to 66% of the primary price change since the previous medium swing or start of the main movement. (3) The "short swing" or minor movement varies with opinion from hours to a month or more. The three movements may be simultaneous, for instance, a daily minor movement in a bearish secondary reaction in a bullish primary movement.
2.Market trends have three phases
Dow Theory asserts that major market trends are composed of three phases: an accumulation phase, a public participation phase, and a distribution phase. The accumulation phase (phase 1) is a period when investors "in the know" are actively buying (selling) stock against the general opinion of the market. During this phase, the stock price does not change much because these investors are in the minority demanding (absorbing) stock that the market at large is supplying (releasing). Eventually, the market catches on to these astute investors and a rapid price change occurs (phase 2). This occurs when trend followers and other technically oriented investors participate. This phase continues until rampant speculation occurs. At this point, the astute investors begin to distribute their holdings to the market (phase 3).
3.The stock market discounts all news
Stock prices quickly incorporate new information as soon as it becomes available. Once news is released, stock prices will change to reflect this new information. On this point, Dow theory agrees with one of the premises of the efficient market hypothesis.
4.Stock market averages must confirm each other
In Dow's time, the US was a growing industrial power. The US had population centers but factories were scattered throughout the country. Factories had to ship their goods to market, usually by rail. Dow's first stock averages were an index of industrial (manufacturing) companies and rail companies. To Dow, a bull market in industrials could not occur unless the railway average rallied as well, usually first. According to this logic, if manufacturers' profits are rising, it follows that they are producing more. If they produce more, then they have to ship more goods to consumers. Hence, if an investor is looking for signs of health in manufacturers, he or she should look at the performance of the companies that ship the output of them to market, the railroads. The two averages should be moving in the same direction. When the performance of the averages diverge, it is a warning that change is in the air.
Both Barron's Magazine and the Wall Street Journal still publish the daily performance of the Dow Jones Transportation Index in chart form. The index contains major railroads, shipping companies, and air freight carriers in the US.
5.Trends are confirmed by volume
Dow believed that volume confirmed price trends. When prices move on low volume, there could be many different explanations. An overly aggressive seller could be present for example. But when price movements are accompanied by high volume, Dow believed this represented the "true" market view. If many participants are active in a particular security, and the price moves significantly in one direction, Dow maintained that this was the direction in which the market anticipated continued movement. To him, it was a signal that a trend is developing.
6.Trends exist until definitive signals prove that they have ended
Dow believed that trends existed despite "market noise". Markets might temporarily move in the direction opposite to the trend, but they will soon resume the prior move. The trend should be given the benefit of the doubt during these reversals. Determining whether a reversal is the start of a new trend or a temporary movement in the current trend is not easy. Dow Theorists often disagree in this determination. Technical analysis tools attempt to clarify this but they can be interpreted differently by different investors



Last edited by godfreydayan on Mon Mar 12, 2012 7:59 pm; edited 1 time in total

2Six basic tenets of Dow theory Empty Re: Six basic tenets of Dow theory on Mon Mar 12, 2012 7:53 pm

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Thanks for sharing.
Could you please provide the source?

3Six basic tenets of Dow theory Empty Re: Six basic tenets of Dow theory on Mon Mar 12, 2012 7:55 pm

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics

4Six basic tenets of Dow theory Empty Re: Six basic tenets of Dow theory on Sat Mar 17, 2012 9:41 pm

greedy007


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Thanks.

5Six basic tenets of Dow theory Empty Re: Six basic tenets of Dow theory on Sat Nov 26, 2016 7:25 pm

jehovah

jehovah
Equity Analytic
Equity Analytic
thanks...!!!!!!!!!!!!!

6Six basic tenets of Dow theory Empty Re: Six basic tenets of Dow theory on Sat Nov 26, 2016 10:00 pm

newer1


Senior Equity Analytic
Senior Equity Analytic
Thnks for sharing

Sponsored content


Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum