History

• The Dow Theory was composed of a series of editorials written by Charles Dow, a journalist and founder of the Wall Street Journal.
  
  

Movements

• Under the Dow Theory the markets have three movements. These would include: the primary movement, which is a major trend lasting a year or more; the medium swing, which is a secondary reaction lasting from 10 days to three months; and short swing, which is movements in the markets lasting from hours to days.
  
  

Trends

• Three trends in the Dow Theory include accumulation, which is when there are large amounts of buying while the public is skeptical; public participation, when the public is becoming actively involved in the buying stocks; and distribution, when the buyers are exhausted signaling a change in trend.
  
  

News

• The Dow Theory states that the stock market incorporates all relevant information. As new information is released to the public stock prices will move up or down to reflect the changing realities.
  
  

Averages

• Under the Dow Theory all stock market averages should move in conjunction with one another. When there are divergences occurring, it is a sign that changes are about to take place in the markets.