Dow Theory investment & finance definition
theory that any major stock market trend must occur both in the Dow Jones
Industrial Average and the Dow Jones Transportation Average; both indices must
reach either new highs or lows, otherwise the market will fall back to its
previous trading range. Dow Theory is based on a technical analysis theory
pioneered by Charles Dow, one of the founders of The Wall Street Journal and
Dow Jones & Co.
See Dow Theory in Wall Street Words
A technical trading theory that holds that stock market price trends can be forecast based on price movements of the Dow Jones Averages (industrials and transportation). The theory classifies price movements into individual components of primary, secondary, and daily. Only when both averages reach new highs or lows (one average confirms the other) is a major trend in progress.
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