Thread 🧵on Six tenets of #DowTheory of #TechnicalAnalysis

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#TechnicalAnalysis #StockMarket

Dow Theory, the foundation of #TechnicalAnalysis was first introduced by Charles Dow, who was founder of Dow Jones & Company and first editor of the Wall Street Journal. This theory is based on many editorials he had written between 1900-1902.
Six Tenets of Dow Theory
1⃣ The market discounts all news

This principle explains that any information available in market is already reflected in price of stocks & indices. This includes all data such as earnings announcements by companies, rise (or fall) in inflation or even sentiments of investors.
2⃣ The market has three trends

This theory was the first to propound that the market moves in trends.

The trends are:

✅Primary Trends
✅Secondary Trends
✅Minor Trends
3⃣ Trends have three phases

The theory says that there are three phases to each primary trend:

✅accumulation phase
✅public participation phase
✅panic phase
4⃣ Indices confirm each other

A trend in the market cannot be verified by a single index. All indices should reflect the same opinion.
5⃣ Trends are confirmed by volume

Trend in market should be supported by trading volumes.

For eg, in upward trend, volume rises with increase in price and falls with decrease in price. And in downward trend, volume increases with fall in price and decreases with price rise.
6⃣ Trends continue until definitive signals indicate otherwise

Theory says that trends exist despite any noise in market. That is, during upward trend, a temporary trend reversal is possible but market continues to move up and trend continues until clear reversal happens.
7⃣

Even though it is more than a hundred years old, the Dow Theory is still relevant in the current trading market.

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It is a series of Sanskrit shlokas recited by Jambavant to Hanuman to remind Him of his true potential.

1. धीवर प्रसार शौर्य भरा: The brave persevering one, your bravery is taking you forward.


2. उतसारा स्थिरा घम्भीरा: The one who is leaping higher and higher, who is firm and stable and seriously determined.

3. ुग्रामा असामा शौर्या भावा: He is strong, and without an equal in the ability/mentality to fight

4. रौद्रमा नवा भीतिर्मा: His anger will cause new fears in his foes.

5.विजिटरीपुरु धीरधारा, कलोथरा शिखरा कठोरा: This is a complex expression seen only in Indic language poetry. The poet is stating that Shivudu is experiencing the intensity of climbing a tough peak, and likening

it to the feeling in a hard battle, when you see your enemy defeated, and blood flowing like a rivulet. This is classical Veera rasa.

6.कुलकु थारथिलीथा गम्भीरा, जाया विराट वीरा: His rough body itself is like a sharp weapon (because he is determined to win). Hail this complete

hero of the world.

7.विलयगागनथाला भिकारा, गरज्जद्धरा गारा: The hero is destructive in the air/sky as well (because he can leap at an enemy from a great height). He can defeat the enemy (simply) with his fearsome roar of war.