Dow Theory

Dow Theory helped Blai avoid damage during the 2008-2009 bear market. The bear market definition is described as the third tool in the Dow Theory toolbox for the 21st century. Modern Dow Theory includes several signal tools besides capitulation. Schannep's version reduces the duration needed to recognize a secondary reaction compared with classical Dow Theory. Schannep Dow Theory is more flexible than classical Dow Theory because it allows more signal combinations. The article presents the 21st-century framework as superior to classical Dow Theory because it adds more ways to detect and trade market turns. Classical Dow Theory is considered a strong timing instrument. Classical Dow Theory has two sell exits. Classical Dow Theory requires approximately three weeks of confirmed prices for a secondary reaction. Dow Theory is presented as a tool for judgment rather than a guaranteed market-beating system. The article evaluates Dow Theory by whether it beats buy-and-hold while reducing drawdowns and risk. The normal Dow Theory signal pattern occurs about 90% of the time. Blai initially found Dow Theory interesting but not immediately practical for making money in markets. Dow Theory is…