“the Grandfather of Technical Analysis”

01:43 Mins Read

Who was Charles H. Dow? What are his 6 theories that setup the foundation of stock investment?

Transcript

“The Grandfather of Technical Analysis” Charles H. Dow, after whom the “Dow Jones” Wall Street index is named, is the founder of many theories, and his contribution to the theories of Technical Analysis is immense. Dow Theory suggests the markets are made up of three distinct phases, which are self repeating. These are called the Accumulation phase, the Mark up phase, and the Distribution phase. The Accumulation phase usually occurs right after a steep sell off in the market.
During the Mark up phase, the stock price rallies quickly and sharply.
In the distribution phase, whenever the prices attempt to go higher, the smart money off loads their holdings. There are 6 components of the Dow theory:
1. The Market Discounts Everything
2. There Are Three Primary Kinds of Market Trends
3. . Primary Trends Have Three Phases
4. Indices Must Confirm Each Other
5. Volume Must Confirm the Trend
6. Trends Persist Until a Clear Reversal Occurs
If you go back in the history of technical analysis, the foundation of this branch of stock investing can be traced back to Charles Dow and his writings. To understand more about such Charles Dow and his theory for effective investment decisions, and learn to execute technical analysis on Smart Money by Angel Broking."

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