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Investments glossary

Dow Theory


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Quotes of the day:

All that is gold does not glitter; not all those that wander are lost.

— J. R. R. Tolkien, The Fellowship of the Ring, 1954

The Dow theory is a financial theory that says the market is in an upward trend if one of its averages (i.e. industrials or transportation) advances above a previous important high and is accompanied or followed by a similar advance in the other average. For example, if the Dow Jones Industrial Average (DJIA) climbs to an intermediate high, the Dow Jones Transportation Average (DJTA) is expected to follow suit within a reasonable period of time.

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