The post Dow Theory: Primary Principles of Market Trend Shifts appeared on BitcoinEthereumNews.com.

Dow Theory, based on the writings of Charles H. Dow, is a technical analysis framework that interprets wider market trends. In this respect, it proposes that the analysis of certain market averages and their movements can help gauge the stock market direction. In this respect, Dow introduced the Dow Jones Transportation Index (DJT) and the Dow Jones Industrial Average (DJIA). Specifically, when one of the respective averages surges above the former high along with a simultaneous increase in the other average, it denotes an upward trend. An Introduction to Dow Theory and Fundamental Principles Although Charles Dow died back in 1902, without publishing his entire theory covering markets, his associates and followers, including William Hamilton, have published his works as the Dow Theory. He believed that the wider stock market underscores overall business conditions within the financial landscape, permitting analysts to evaluate them and anticipate stock and market trends. The respective principle goes in line with the Efficient Market Hypothesis (EMH). Particularly, Dow believed that the market comprehensively discounts everything. This indicates that the price already reflects all the available information. For instance, if a firm is broadly anticipated to report optimistic earnings, this will be reflected in the market before its actual occurrence. Hence, the share demand will rise ahead of the release of the report, and subsequently, the price may see no change much after the anticipated positive report ultimately comes out. Additionally, in a few cases, ow witnessed that a firm might witness a reduction in its stock price following good news. Such a development displays the undesired timing of the move when it comes to expectation. The respective principle is still considered true among several investors and traders, specifically those who extensively utilize technical analysis. Nevertheless, those who prioritize fundamental analysis disagree with this idea while…

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Filed under: News - @ February 21, 2026 1:30 pm