Dow Theory

Dow theory on share price movements is a form of the technical analysis that includes the some aspects of sector rotation. But to make it simple to understand and apply in our daily life we make it simple.

Stocks Category as per Dow Theory

There are mainly 3 categories-

Good Performing Stocks

These stocks make higher high and higher low. These are up trending stocks.

Bad Performing Stocks

These stocks maker lower high and lower lows. These are down trending stocks.

Sideways Stocks

These stocks are in sideways i.e. work in range not moving upward and not moving downward. 

Some Learnings from Dow Theory are given below-

Market have 3 phases: 

1. Accumulation Phase (Intelligent investors accumulate or buy no. of shares). 

2. Absorption Phase (Public start participation in the rally). 

3. Distribution Phase (Intelligent investors distribute or sell no. of shares).

Stock market discount all news and trends are confirmed by volume. Dow Theory help both in Technical analysis and Fundamental analysis of stocks.