Dow Theory: translation
Used in the context of general equities. Technical theory that a major trend in the stock market must be confirmed by simultaneous movement of the Dow Jones Industrial Average and the Dow Jones Transportation Average to new highs or lows. Bloomberg Financial Dictionary
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The term generally used to describe Charles Dow's ideas about stock market behaviour. Dow applied his ideas to the stock market averages (indices) he designed - the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA). His theories are widely recognized to be the foundation to many modern technical anlaysis disciplines. Dow Theory is also used specifically to describe one of Dow's theories - that a major trend in the US stock market has to be confirmed by a parallel change in the DJIA and DJTA.
► See also Technical Analysis.