Chapter 3 - The Dow Theory - The Dow Theory is the granddaddy of all technical analysis...it is known by name to nearly everyone who has had any association with the stock market, and respected by most....One of the best of all reasons for a student of market technics to start with the Dow Theory is because that theory stresses the general market trend....
    Dow Theory has much to recommend it. Concepts embodied within Dow Theory retain their validity to the present day, and retain their importance in the foundation thinking of technical analysis. Concepts of waves, major secondary and minor movements are absolutely descriptive of the reality of the market. Other constructs within Dow Theory are similarly important -- that all information is discounted; that major market movements are like the tide and, as it were, raise all boats; that trends tend to continue. These are not just theoretical musings, but observations of reality....

Chapter 4 - The Dow Theory in Practice - But the utilization of Dow Theory is, after all, a matter of interpretation....

Chapter 5.1 - The Dow Theory in the 20^th and 21^st Centuries - Here (1956) the record continues made by a different hand. I am indebted to Jack Schannep of The Dow Theory.Com (www.thedowtheory.com) for the data recapitulated here. At that URL a very enlightening exposition of the Theory and its record may be found--much more complete than that which is found here.       (Record shown is from our interpretation from 1956 through the year 2000 taken directly from "The Dow Theory" found at www.TheDowTheory.com)
   In brief, an investment of $100 in 1897 would have become $11,236.65 in 1956 simply by buying the Industrial Average stocks each time the Dow Theory announced a Bull Market and holding them until the Dow Theory announced a Bear Market....Taking the $11,236.65 in 1956 and continuing to buy and sell on Dow Theory signals, the technical investor would have had $362,212.97 in pocket when he sold at the end of the 20th century as opposed to the $39,685.03 of his dozing counterpart (a 'buy and hold' investor)....In addition, he would not have been deliquidified during Bear Markets.
   Whether of not the Dow Theory retains its mojo over the market as a whole, there can be no question that it still calls the turn for its sector of the market, which as Jack Schannep correctly notes, has five times the capitalization of the NASDAQ.

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