tag:blogger.com,1999:blog-6134743053361487135.post3120822120271692765..comments2023-06-15T09:28:28.686-04:00Comments on Dow Theory Investment: Can Dow Theory be applied to foreign and to non-stock markets?The Dow Theoristhttp://www.blogger.com/profile/05344444810007324303noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-6134743053361487135.post-75342351816644376502012-10-11T08:59:33.007-04:002012-10-11T08:59:33.007-04:00That’s a tough question..:=)
I fear that you shou...That’s a tough question..:=)<br /><br />I fear that you should create your own Taylor-made index. Nowadays, with the help of computers it shouldn’t be that difficult. All Dow Theorists agree that the indications of just one index are deceptive. If we just followed one index, then Dow Theory would just be another “breakout” trading method.<br /><br />However, if you compare the reliability (and more importantly: the profit factor) of Dow Theory breakouts with a “normal” breakout system, you will see that the Dow Theory is years light from “normal” breakout methods. Why? Because the principle of confirmation filters out unreliable signals. <br /><br />Another way that I use to apply Dow Theory principles is to compare country indices. Thus, I primary bull signal in, let’s say, France (CAC index) unconfirmed by Germany (DAX index) would be suspect. However, I’d be cautious with this approach because the magic of the principle of confirmation lies in comparing kind of similar, albeit not equal, markets. Thus, with a melting Spain, I think applying Dow theory to the IBEX and the DAX would not be very adequate. Furthermore, the Transports play a decisive role (merchandise has to be shipped, not only produced). You can find more information about the Transports and other indices under Dow Theory here:<br /><br />http://www.dowtheoryinvestment.com/2012/09/do-transports-still-matter-under-dow.html<br /><br />Feel free to send me an email to further discuss this issue. I am looking forward to seeing the results of your research.<br /><br />Regards,<br />The Dow Theoristhttps://www.blogger.com/profile/05344444810007324303noreply@blogger.comtag:blogger.com,1999:blog-6134743053361487135.post-41885707848683916132012-10-11T05:37:07.992-04:002012-10-11T05:37:07.992-04:00I am happy that I stumbled upon your post on Dow T...I am happy that I stumbled upon your post on Dow Theory application on non-US markets, as I am currently planning to write my bachelor's thesis on application of Dow Theory on my country's stock market.<br /><br />You noted that Dow Theory is based on the principle of confirmation. As I understand, big par is the DJIA and the Transports average that are observed in this manner. How would you approach this aspect if the market I'm looking to cover doesn't have a Transports average or similar, just the stocks index? I would very much appreciate your insight.<br /><br />Best regards,<br /><br />AnteAntehttps://www.blogger.com/profile/06616417014707665130noreply@blogger.comtag:blogger.com,1999:blog-6134743053361487135.post-77359698798173515972012-10-06T09:10:57.368-04:002012-10-06T09:10:57.368-04:00Good suggestions, again. To tell you the truth, we...Good suggestions, again. To tell you the truth, we have just scrapped the surface of the countless applications of the Dow Theory. I am convinced that many value and momentum investment strategies would greatly benefit from the application of the Dow Theory to them. <br /><br />Here you have another application of the Dow Theory:<br /><br />http://www.dowtheoryinvestment.com/2012/09/can-do-theory-be-applied-to-short-term.html<br /><br />Regards,<br />The Dow Theoristhttps://www.blogger.com/profile/05344444810007324303noreply@blogger.comtag:blogger.com,1999:blog-6134743053361487135.post-8301657617618094672012-10-06T09:03:34.717-04:002012-10-06T09:03:34.717-04:00Thanks to you. Many posts are on the pipeline, but...Thanks to you. Many posts are on the pipeline, but I have to strike a balance between "theory" and "practice"; hence investing in real time and monitoring the markets consume a good chunk of time.<br /><br />Regards,The Dow Theoristhttps://www.blogger.com/profile/05344444810007324303noreply@blogger.comtag:blogger.com,1999:blog-6134743053361487135.post-4131339509912495142012-10-06T07:52:56.467-04:002012-10-06T07:52:56.467-04:00Thanks for your post on this subject. I'm also...Thanks for your post on this subject. I'm also interested in how the Dow Theory applies to small and mid-cap indices, such as the Wilshire 4500 Index. I suppose volitility might be an issue there too. I look forward to future posts on the broader application of these principles. Remochttps://www.blogger.com/profile/12626620056022638163noreply@blogger.comtag:blogger.com,1999:blog-6134743053361487135.post-11162436439772587422012-10-06T04:09:13.294-04:002012-10-06T04:09:13.294-04:00Thank you very much for all your insightful though...Thank you very much for all your insightful thoughts on Dow Theory. I hope you will keep posting your wisdom to enlighten us.Tanhttps://www.blogger.com/profile/05270811951473581362noreply@blogger.com