Friday, June 10, 2022

Can the Dow Theory be applied to Sectors? Answer: YES

Can the Dow Theory be successfully applied to sectors? Yes, and it works great. In most cases, there is even more outperformance and drawdown reduction versus Buy and Hold than when applied to Indexes. In a future post, I will explain why the Dow Theory works with sectors and what sectors stand to profit most from the Dow Theory. In the meantime, as an appetizer, I applied the Dow Theory to XRT (retail sector ETF). The results are astounding:

1) The Dow Theory increased total profits by 164.37%

2) Maximum drawdown was cut by 52.6%. On a close trade basis, it was cut by 69.89%

 More will follow soon.


Manuel Blay

Editor of



  1. Hello Manuel,

    Your blog is very interesting.

    Does Dow Theory or DT21S work on Bitcoin Prices?

    Bitcoin prices have come down a lot over the past few months.

    Could you analyze the price curve with Dow theory or DT21S?

    I believe Bitcoin is very much tied to the Nasdaq 100.
    What do you think ?
    Will Bitcoin bottom at the same time as the Nasdaq 100?
    Could it be a "capitulation" ?

    Thank you in advance for your replies
    and congratulations on your analysis.

  2. Hello. Your questions deserve a post that, right now, I don't have the time to write. Most likely, some of your questions will be addressed in a future interview that Alessio Rastani will conduct by early August 2022 (keep an eye on his youtube channel).

    In last's year interview, I dealt with crypto and the Dow Theory:
    Best regards,
    Manuel Blay