The Dow theory on stock price movement is a form of technical analysis that includes some aspects of sector rotation. The theory was derived from 255 editorials in The Wall Street Journal written by Charles H. Dow (1851–1902), journalist, founder, and first editor of The Wall Street Journal and co-founder of Dow Jones and Company. Following Dow's death, William Peter Hamilton, Robert Rhea, and E. George Schaefer organized and collectively represented Dow's editorials. Dow himself never used the term Dow theory nor presented it as a trading system.
- The Dow Theory is one of the oldest and most famous technical theories.
- It was originated by Charles Dow, the founder of Dow Jones Company in the late nineteenth century.
- It is a helpful tool for determining the relative strength of the stock market.
- It is useful in that it gives you a path to think about how stock prices and a market will move if they are context-free (i.e. free from any external factor)
