Dow Theory Primer

  • Posted by
  • on August 31st, 2010
derek

One of the originators of technical analysis as practiced in the U.S. was Charles Dow, whose Dow Theory to this day remains the heart of discussion of trends and multiple time frame analysis.  While the basics often get overlooked in our effort to speed things up and use the latest tools, the foundations of primary/secondary/tertiary trends and accumulation/distribution remain the building blocks of technical analysis.

Chris Perruna applies it to the present day with his “1-2-3 Trend Reversal Watch List“, a list of stocks exhibiting some of the 1) High 2) Retest 3)Break patterns further explained by Vic Sperandeo in his classic ”Trader Vic: Methods of a Wall St. Master“.  His use of weekly charts in this watchlist allows us to take a broader perspective on the primary trends at play.

Raghee Horner presents a clear case on her favorite Dow Theory principles, and if you want a more intensive look at how the concepts can be fused together there’s always Brian Shannon’s modern classic ”Technical Analysis Using Multiple Time Frames“.  No matter how much we juice up our charts with splashy indicators, the real money flow reveals itself in slow motion through the timeless concepts of Charles Dow.


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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