Category: Dow Theory

Dow Theory Special Issue: Hamilton’s insight that the Dow Theory may be applied to many markets seems to be right

posted on: December 6, 2019

Applying the Dow Theory to oil markets and towards building a Dow Theory portfolio Hamilton was Charles Dow understudy, and writer of the book “The Stock Market Barometer” As I have written here, Hamilton was of the opinion that the Dow Theory may be applied to other markets. Based on that insight, when I started […]

Dow Theory Special Issue: Capitulation. The ultimate bottom indicator (VI)

posted on: November 16, 2019

When and how much to buy. Transitioning from a 25% to a fully invested position As a reminder, I have been writing about capitulation in the following posts. http://www.dowtheoryinvestment.com/2019/03/dow-theory-special-issue-capitulation.html http://www.dowtheoryinvestment.com/2019/03/dow-theory-special-issue-capitulation_22.html http://www.dowtheoryinvestment.com/2019/05/dow-theory-special-issue-capitulation.html http://www.dowtheoryinvestment.com/2019/07/dow-theory-special-issue-capitulation.html http://www.dowtheoryinvestment.com/2019/07/dow-theory-special-issue-capitulation_11.html Well, I finally squeezed some time out of my agenda to pen another post concerning Schannep’s capitulation indicator. Today we will […]

Dow Theory special issue: which indices to use and the appraisal of secondary reactions under the Dow Theory

posted on: October 19, 2019

Answer to an email from a reader This post is a dedicated response to the email I received from one follower of this blog. I quote the email and my answer in red. To respect privacy I have deleted the name of its author. I feel the questions were well grounded, and hence readers may […]

Dow Theory Special Issue: Capitulation. The ultimate bottom indicator (V)

posted on: July 11, 2019

Measuring the risk when catching falling knives. So great? As a reminder, I have been writing about capitulation in the following posts. http://www.dowtheoryinvestment.com/2019/03/dow-theory-special-issue-capitulation.html http://www.dowtheoryinvestment.com/2019/03/dow-theory-special-issue-capitulation_22.html http://www.dowtheoryinvestment.com/2019/05/dow-theory-special-issue-capitulation.html http://www.dowtheoryinvestment.com/2019/07/dow-theory-special-issue-capitulation.html Since capitulation is a mean reversing tool, and, by definition, we don’t wait until the trend shows signs of reversing, we are catching the proverbial “falling knife”. This means […]

Dow Theory Special Issue: Capitulation The ultimate bottom indicator (IV)

posted on: July 4, 2019

Shortening of the time requirement for secondary reactions As a reminder, I have been writing about capitulation in the following posts. http://www.dowtheoryinvestment.com/2019/03/dow-theory-special-issue-capitulation.html http://www.dowtheoryinvestment.com/2019/03/dow-theory-special-issue-capitulation_22.html http://www.dowtheoryinvestment.com/2019/05/dow-theory-special-issue-capitulation.html As I explained in the past, “capitulation” is a mean reversing tool. When markets get severely oversold, we derogate from trend following, and bet for a trend reversal. The track record […]

Dow Theory Special Issue: Which markets are better suited to the Dow Theory (and Trend following in general) and the reason why

posted on: June 26, 2019

The power of trends and why it is not wise to disregard a Dow Theory signal based on the belief that the market is already overstretched. This is another post that I was written on June 19th at Nashville’s airport while being stranded due to bad weather conditions. However, it has been “matured” and edited […]

Dow Theory Special Issue: Capitulation. The ultimate bottom indicator (III)

posted on: May 22, 2019

Performance after capitulation: Further advances and declines At last I found some time to pen a new post concerning capitulation. The proof of the pudding is in the eating. In this post, we will describe what happens after capitulation has occurred. Do we get strong rallies after capitulation? If yes, then the indicator has some […]

Dow theory Update for April 5st: Back to divergent interpretations of the Dow Theory

posted on: April 5, 2019

Trends unchanged for US stocks, gold, silver and their miners Cervantes’ master piece “Don Quixote of la Mancha” starts as follows: “In a village of La Mancha, the name of which I have no desire to call to mind, there lived not long since one of those gentlemen that kept a lance in the lance-rack….” […]

Dow Theory Special Issue: Capitulation. The ultimate bottom indicator (II)

posted on: March 22, 2019

Definition of capitulation. Betting for a mean reversion We continue with our saga concerning “capitulation”. I feel this saga is going to keep me busy for quite some time. Here you have the link to the first post. http://www.dowtheoryinvestment.com/2019/03/dow-theory-special-issue-capitulation.html Capitulation is a bottom detector tool devised by Jack Schannep. Thus, capitulation is by nature mean […]

Dow Theory Special Issue: Capitulation. The ultimate bottom indicator (I)

posted on: March 8, 2019

How to catch falling knives without cutting yourself There is a German saying which reads “Klasse statt Masse” (class instead of mass, so better little and good than a lot and of bad quality) Since I don´t have much time to write, and, hence I cannot do lots of “Masse”, I hope that the next […]

Dow Theory Update for February 4: Divergent interpretations of the “Classical” Dow Theory

posted on: February 4, 2019

Trying to make sense of them This is a long post and a quite difficult one to digest. However, if you want to really understand how secondary reactions are to be appraised under a strict reading of the Rhea/Classical Dow Theory, please bear with me. Readers of this Dow Theory blog know that one of […]

Dow Theory Special Issue: The two variables accounting for the Dow Theory out and underperformance versus buy and hold

posted on: January 17, 2019

It was a long time of not posting “philosophical” and introspective aspects concerning the Dow Theory. While it may seem evident to many, this post is the result of some nights of serious introspection. I wanted to completely isolate the factors (variables) that account for the Dow Theory outperformanceversus buy and hold (BAH). This is […]