1️⃣ Price discounts everything

All news, data, and expectations are reflected in the price. So price action is the primary factor, while the other tools merely help with forecasting.

2️⃣ The market moves in 3 directions

· Primary trend: Long-term, lasting months or years.

· Secondary trend: A temporary correction against the primary trend.

· Minor trends: Daily fluctuations that are often just noise.

3️⃣ The primary trend unfolds in three psychological phases

· Accumulation: Prices are low and the news is bad, so savvy investors enter quietly.

· Public participation: The public and analysts begin to enter as the trend becomes clear.

· Distribution and peak: Confidence reaches its peak, and market makers begin offloading their positions before the downturn.

4️⃣ Confirmation across related sectors

A trend is stronger when its signals are confirmed across related sectors, such as transportation and industry. Contradictions between them are an early warning of a possible reversal.

⚠️ This refers to economic sectors, not indicators such as RSI or MACD.

5️⃣ Trading volume supports the trend

A rising price accompanied by rising volume lends credibility to the move. A rally on weak volume, however, is an early warning of weakening momentum.

6️⃣ The trend continues until proven otherwise

Don’t predict reversals at random. As long as the overall trend remains intact, go with it and ignore temporary corrections, especially if you’re a long-term investor.

7️⃣ Summary

Dow Theory is more than just old rules; it’s a compass for understanding market behavior: price comes first, the trend is your friend, volume confirms it, and don’t reverse course before there’s evidence.

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