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I have never known a man who, once having attained an understanding of the Theory, ever abandoned it.
Robert Rhea



Dow Theory



Our Dow Theory Prediction



Dow Industrial Average green
Dow Transportation Average blue
 
Notes & Links
 

7/23/09 With the DJIA closing today at 9069.29, and the DJTA closing at 3506.12, InvestmentTools view of Dow Theory has turned bullish.
Dow Theory in a nut shell:

Charles Dow, founder of the Wall Street Journal, developed the Dow Theory from his analysis of market price action in the late 19th century.
The Theory was popularized by William Hamilton, S.A. Nelson, Robert Rhea, Perry P. Greiner, Hale C. Whitcomb, Richard Russell and goes like this:
Stock market rallies, confirmed by both the Transportation and Industrial Averages, penetrating to new highs, with declines failing to break below previous lows, indicate a bullish trend.
Conversely successive new lows of both averages, with rallies failing to penetrate previous highs, have a bearish implication.
 
The average dividend yield over the whole period was 4.87 percent. Ignoring this return leads to enormous understatements of the long run payoff to owning stocks. It would not be difficult to publicize a total return index rather than a stock price index. On a daily basis, the difference would be barely noticeable. However, over time horizons longer than three months, the difference becomes noticeable. Over decades, the difference becomes enormous.
A value-weighted index of the Dow-components including dividend payments (VW-DOWD) would have closed at 233,060 points at the end of December 1998 had it started off in October 1928 at 239.43 points.