He was born on 6th of November 1851.after having a formal education he left the farm to start his life a journalist at the age of 21. He found a job as a reporter and he found that he had a talent of historic pieces and interest in business sector.
During his job he interviewed many industrialists, financiers and capitalists. Then he used that interviewed to learn about the methods.
In 1882, Mr. Dow and his felloe reporter Edward Jones decide to start their own business called Dow, Jones & Company. In 1883, they published a customers afternoon letter, summary contain on two pages of the day financial news. In which included the certain stoke prices, movements. They used very easy writing to understand the formats that time reports are using bribes to pump up the stock in them articles. Dow wrote that analysis that every body can under stand easily.
DJIA appeared in small new letter as normal of few major stocks on rail industry and shipping.
Dow wants to give his readership to the market. He wants to clarify the picture. This is easy to stands ups and down to the multitude stocks. In 1896, DJIA first time was using top 12 stocks methods in the market. The methods were simple sum and divide that yielded 40.94 as first published.
8th July 1889 the wall street journal received the thousand of thanks to circulating the customers after noon letter. In which Dow and Jones used many expansive methods of journal to pass more and more finical information. Make it much easy for the public understand them.
Before this there was no consistent and reliable source of stock information company tired to hide them extreme information true to hide them extreme information true value and incomprehensible earnings. Dow and Jones cut the barrier to give information that was only available inside before. The wall street journal becomes famous as a financial paper in US. DJIA always help people to tell them the market ups and downs.
Dow never formally explained his theory as become a fully known. But it is only partially understood after he died 1902.
Technical Analysis
Market Discount everything
The theory suggests that all the information current, past and future is discounted into the market and prices if indexes and stocks.
It is very important that the market participants and market itself know the future planning. That all factors those happened or will be happened could effect on the market prices.
Three Trend Market
It is Very important part of the theory. We need to know the market trend first. It is going in general direction, or trend. It does not work in a straight line. The market really up to the high peak and then sell off to a low trough. But normally work in one direction.
In up words trend broken in to many rallies where every rally has high and low. In up was trend the each peak must reach the higher peak the previous rally.
Down trend is broken into many rallies. Where every rally has high and low. In low way trend the each peak must reach the lower peak the pervious rally.
Dow Theory identifies three trends.
Primary Trend
It is the major trend of the market. Which is help to determine the over riding trend which effects movements in stock prices.
Secondary trend or intermediate trend
Secondary trend move in opposite was of the primary trend or as a correction of primary trend.
Minor trend
Which shows the market movement is lasting less then three weeks. It correct the moves with in secondary moves and those who go opposite way of the secondary trend.
Ref: -http://www.investopedia.com/university/Dowtheory/Dowtheory2.asp
The Three Phases Of Primary Trends
There are three phases of primary trends.
Accumulation phase (distribution phase)
The public participation phase
A panic phase (excess phase).
How the three stages apply on Bull and Bear market.
Primary Upward Trend (Bull Market)
Accumulation phase, this is the start of the upward movement. This is also considered the indicate at which educated investors start to come into the market.
The accumulation segment normally comes at the end of a downtrend, when everything is apparently at its most unpleasant. But this is also the time when the value of the market is at its most nice-looking level because by this tip most of the bad news is priced into the market, thus restraining downside danger and offering healthy valuations.
When informed financiers joined the market through the accumulation time, they did so with the supposition that the worst was end and an improvement lay ahead. As this starts to appear, the new primary trend progress into what is recognize as the public participation phase.
When market moves higher improved business terms and buying by markets members to move starts age, we start moving into the excess stage. On this point, the market is on its high peak for the investors called Excess Phase.
Primary Downward Trend (Bear Market)
Distribution phase
This is the first phase of the bear market called as the distribution phase. In this informed sell, buyers their position. Distribution phase is opposite of the accumulation phase during the bull market in which informed buyers are now selling into an overbought market instead of buying in an oversold market.
Public Participation Phase
This is same phase found in primary rising movement in that it lasts and longest. It will symbolize the largest of the move in this case downward.
The Panic Phase
This is the last stage of the primary down market tends to filled market panic and direct to large sell off in very short time period. The market produced up with negative reaction, counting poor outlooks on companies, the financial system and the on the whole market.
Market Indexes Must Confirm Each Other
A main U-turn from a bull to a bear market cannot be indication if both indexes (traditionally the Dow Industrial and Rail Averages) are in agreement. For example, if one directory is confirming a new primary uptrend but another directory remains in a primary downward trend, it is hard to suppose that a new trend has begun.
Volume Must Confirm The Trend
The main signs for buying and selling are based on the price actions of the indexes. The Volume is also used as a secondary pointer to help verify what the price movement is indicating.
In up trend the volume should increase in the up word trend shows strength because traders are willing to buys the assets.
Trend Remains In Effect Until Clear Reversal Occurs
Traders are waiting for the clear picture of trend turn because the aim is not to puzzle a true reversal in the primary trend with secondary trend correction. The secondary trend moves in opposite direction of the primary trend that will not continue.
Dow Theory Specifics
We discuss about lots of ideas about Dow Theory with its main tenets. Know we are discussing about the technical approach about the theory.
Closing Prices and Line Ranges
He relied only on closing prices and was not worried about the intraday actions of the index. For a trend signal to be produced, the closing price has to signal the movement, not with in a day price movement.
Signals and Identification of Trends
Another complex feature of Dow theory is correct discovering of trend reversals. So it is very important for the followers that the theory trade in general route of the market. So they can discover the point inat which this direction shifts.
Current Relevance
There is little doubt about the main importance in the history of technical analysis of the theory. most of it ideas and views are basic about what we know today. But it is also have a contribution in other theories.
The big problem of the theory is that the followers can miss out the large advantages due to the conservative nature of the trend reversal.
There are weak points in the theory but it idea of trend market and peak-and-trough investigation is found continually within technical writings and ideas.
It helps investors to improve their understanding to make the good investment and achieve the goals.
Conclusion
1. This theory helps to under stand the beginning of technical analysis and also you can under stand and analyze the market views.
2. In this he belief that the stock market behaviour and easily can measure the health of the business situation.
3. Market discount
4. Trend analysis use to check the market way.
5. According to this theory primary trend is the main market trends.
6. But the secondary trend is do the correction on the primary trend.
7. Primary trend have a three phases
Upward trend
Downward trend
Panic phase
8. Bull and Bear market can’t be signalled unless both indexes are in agreement
9. Trend must be confirmed by the volume.
10. Until the clear reversal happens the trend stays there.
11. Key technique analysis is PEAK and Trough analysis
12. Followers can miss out the large gain due to the conservative nature
13. Another problem is over time the economy and the indexes.
Ref: - http://www.investopedia.com/university/Dowtheory/Dowtheory9.asp
Nikolai Kondratiev:
His life time period was from 1892-1938; he was the most talented young Russian economist. With he is talent he was best known internationally at that time. His main contribution was presentation of hypothesis of the long wave in capital development named by Joseph Schumpeter and known after that as Kondratiev waves. In this he did some very important topic in economics.
he was born on 4 March 1892 in the province of Kostroma, north of Moscow, into a
Peasant family. He studied at the University of St. Petersburg, in Tugan-Baranowsky. He was member of the Revolutionary Socialist Party, he was work in the area of agricultural economics and statistics and the important crisis of food supplies. He was appointed Minister of Supply on 5 October 1917, aged 25.at Kerensky government,
into a large and respected centre with 51 researchers in 1923.
In 1923, Kondratiev intervened in the debate about the "scissors crisis", following the general opinion of his colleagues. In 1923-5, he worked on a five-year plan for the development of the Soviet agriculture. In 1924, after publishing a book (1922, see Table 1), presenting the first tentative version of his theory of the major cycles,
Main Problems of Economic Static’s and Dynamics
His papers had an instant and main impact when they were printed, and the rapidity. After translated and printed helps to with which clarify his fame and election to the Olympus of economics.
