trend theory

Introduction

The Dow Theory is currently one of the oldest technical analysis theories used by investors and market analysts. The Dow Theory was created by Charles Dow in the late 1800s, and is still the foundation of many of the technical analysis theories used today. The Dow Theory is based on the idea that the stock market is driven by three primary forces: fear, greed, and the expectation of future profits. The theory suggests that stock prices will move higher when there is an increase in short-term demand (greed) or anticipation of future earnings (expectation of future profits). Similarly, stock prices will move lower when there is a decrease in short-term demand (fear) or a decrease in expectations of future earnings.

The Dow Theory states that there are three key principles which must be observed for successful investment: trends, support and resistance, and volume. According to the theory, an investor must be aware of the primary trend of the market, observe price support and resistance levels, and pay attention to trading volume. The primary trend of the market is determined by looking at the overall direction of prices, while support and resistance levels are points at which the price of a security has the potential to reverse direction. Finally, trading volume is used to confirm the primary trend and identify possible turning points.

The Dow Theory identifies two types of trend: a primary trend and a secondary trend. A primary trend is a long-term trend that generally lasts between six months and three years. This trend is the major direction of the security, which can be either up, down, or sideways. The secondary trend typically follows the primary trend, but lasts for a much shorter period of time; it is often referred to as a “correction” or “consolidation” phase.

Support and resistance levels are another important aspect of the Dow Theory. Support levels are points at which the price of a security has the potential to reverse direction and begin to move higher. Similarly, resistance levels are points at which the price of a security has the potential to reverse direction and begin to move lower. Support and resistance levels are determined by examining past price trends and studying the amount of buying and selling that occurred at various prices.

Finally, the Dow Theory states that volume is an important indicator of future price movements. Volume can help investors determine if there is momentum behind a particular stock, meaning that there is a large amount of buying pressure pushing the prices higher. Similarly, a large amount of selling pressure pushing prices lower can often be seen with decreasing volume.

Conclusion

The Dow Theory is one of the oldest technical analysis theories used by investors and market analysts. It is based on the idea that stock movements are driven by the emotions of fear, greed, and future expectations. The theory identifies three important indicators for successful investment: trends, support and resistance levels, and volume. The primary trend is the major direction of the security, while the secondary trend follows the primary trend and lasts for a shorter period of time. Support and resistance levels are points at which the price of a security has the potential to reverse direction, while volume can indicate the amount of buying or selling pressure behind a particular stock. By studying these indicators, investors can gain insight into future price movements and make sound investment decisions.

Cyclical theories of history suggest that over the course of human history, societies have moved in a predictable cycle of decline, renewal, and decline again. This cycle has been observed across many cultures and civilizations and has been documented by many scholars over the centuries. It is believed that civilizations experience decline due to prolonged economic or political turmoil, or simply because they have grown too large or wealthy. Then, after a period of decline and darkness, these societies eventually recover and experience renewal and revitalization.

The most widely accepted cycle theory is the “four-stage cyclical model of history”. This model suggests that societies move through stages of a coherent pattern that includes the rise of a civilization, followed by a period of growth, decline, and finally a period of renewal and revitalization. The stages are usually characterized by a change in attitude towards novelty, a general lack of political freedom, and the gradual rise of a new ruling class.

Another theory of cyclical history is the “Hegelian Dialectic”. This theory suggests that history is composed of a conflict between opposing forces, with each idea or force expanding and becoming more extreme until a new synthesis is created in the middle of the struggle. The idea is that when two contrary ideas come into conflict in a society, a new solution emerges out of the struggle. This new solution, however, eventually leads to a new conflict that initiates another cycle.

The final widely accepted theory is Marxist’s theory of class struggle. This theory suggests that civilizations progress in a cyclical pattern based on the struggle between the working class and the ruling class. According to Marx, as the working class becomes increasingly frustrated with their economic and political situation, they eventually revolt and take power, initiating a new stage of history. However, this new stage eventually leads to a new oppressive regime, and the cycle begins again.

Despite the fact that the exact mechanisms that drive the cycles of history remain unclear, there have been numerous attempts to explain the link between historical events and theories of cyclical history. It is clear, however, that cycles of history have shaped the course of human existence for many centuries. Understanding this repeating pattern may offer potential insights into how mankind might navigate the course of historical development in the future.