The relationship between Dow theory and the stock market!

Many technical analyses, such as morphological analysis and wave theory, use the Dow theory as the basis for the evolution of original technical analysis. Let's talk about the relationship between the Dow theory and today's stock market.

Starting from the three most widely known theorems, theorems, market behavior is inclusive and digestive, market behavior follows the trend, and history will repeat itself. Among these three theorems, there are many Charles investment ideas, which can also be said to be the backbone of technical analysis.

Charles' first theorem hoped that the market was originally a gathering place for hundreds of news. For example, Jun A believes that a country's civil war and unstable economy caused it to sell the shares of local companies; Jun B learned that the local companies will still have considerable profitability next year, so he bought the shares of local companies; Jun received a third different message and made an investment decision and so on.

Charles believes that market prices measure news from all sides, and there is a very practical reason to use this theorem. One person can't see all the information and news in the world, but the market only shows the impact of all information in the form of price.

Many people may not understand the meaning behind the second theorem. Charles believes that the market cannot be manipulated artificially, that is, the cornerstone of technical analysis, Dow theory, denies that there is a large investor in the market that manipulates the market.

According to Charles, first of all, no big investor is richer than the market, so all investors involved in trading are big investors. If you want to find the footprint of a big investor, look at the path you have taken.

Secondly, even if a large investor can control the short-term price through buying and selling, it will eventually be a large-scale buying and selling because the market sees an obvious trend or based on objective analysis. The subsequent market power will be extremely huge, leading to this big Investors cannot reverse, and the trend will continue.

The third theorem is that the market will repeat certain behaviors, and the behaviors behind it originate from market psychology. Therefore, the practical significance of historical reenactment is that people's emotions and psychology will continuously affect the market's investment decision reenactment.

However, Dow's theory is more suitable for overall market behavior or stocks with a large market value. Stocks with a small market value may not be suitable because the larger the market value, the greater the market power. On the contrary, the smaller the market value, the easier it is to be manipulated.