Dow Theory

Here are the main points of the Dow Theory:

1) Prime trend of the market can't be manipulated;
2) The secondary movement retrace 1/3 - 2/3 of the primary move, with 50% being the typical move;
3) The secondary moves tend to be faster and sharper than its preceding primary movement;
4) At the end of secondary movement, there is usually a dull peroid just before the turnaround, Little price movement, a decline on volumn, or a combination of these two marks the dullness;
5) Lows are sometimes accompanied by high-volumn washout day;
6) Each primary trend has three stages: accumulation/distribution, big move, excess, with the first stage being hardly identified by;
7) Volumn normally be heaver in primary trend and light in correction;
8) For the primary trend buy/sell signal to be valid, both $DJIA and $DJTA must be confirmed with each other;
9) The signal is mostly too late once the new primary trend is confirmed.