Dow Theory Basics

How to learn the Dow Theory

While we will discuss and deepen all the tenets of the Dow Theory and apply them "life" to the markets, this blog is neither a primer nor a book on Dow Theory. Any reader interested in becoming conversant with Dow Theory is highly encouraged to study and read passionately the following books and websites.

      A)  Books on the Dow Theory that I recommend.

There are a many Dow Theory books out there. However, the three most useful books on the Dow Theory are, in my opinion, those written by Russell, Rhea and Schannep who are, in my opinion, the greatest Dow Theorists ever. 

I would begin with this one. It is brief and clear. It is a great primer to Dow Theory written by Richard Russell the most famous Dow Theorist still alive to this day:

Dow Theory Today (Fraser Publishing Library) (The Contrary Opinion Library) [Paperback] Richard Russell (Author)

After having digested Russell’s book, I’d go on with the classical work on Dow Theory written in 1932.
The Dow Theory (Fraser Publishing Library) [Paperback] Robert Rhea (Author) 

After Rhea’s book, and last, but definitely not least by any means, I’d continue with this one:
Dow Theory for the 21st Century: Technical Indicators for Improving Your Investment Results [Hardcover]  Jack Schannep (Author) 

Schannep’s book is definitely a great one and makes a wonderful job in presenting an updated version of the Dow Theory while respecting its essentials. It is written from a real investor to the real investor. It is a no-nonsense book

Anyone really interested in fully understanding Dow Theory should read at least three times each of the three books I have just mentioned and at least once a year should come back to them.

There are more books on Dow Theory. However, I feel these books, while good on their own and providing valid insights, rather than enlighten the reader might confuse him (i.e. in the delicate issue of time-frames, values, etc). Thus, my piece of advice to the serious student of the Dow Theory is to get focused on the three books I just mentioned. When one has solidified the Dow Theory as explained by the three authors I recommend, then one is ready to read what other Dow Theorists wrote. Do one thing at a time.

         B) Sources on internet about the Dow Theory.

For those interested in learning more about the Dow Theory, the following sources may be useful, although they are no substitutes for reading the books I recommend. Nobody can become a good Dow Theorist merely by browsing the web. has a good introduction to the Dow Theory which you can find here:

From the different “free” sources for Dow Theory in the internet, this is the only one which I think is “orthodox” enough to be recommended, although, as I will further explain in further posts in this blog, my Dow Theory "flavor" is slightly different (i.e. I use the S&P as an addition to the Transports and Industrials).

Of course, the primer you can find in won’t make you the best Dow Theorist around but it is a good summary of the main tenets of the Dow Theory.

Schannep’s  "" also provides a very good graphic representation of a primary bull and bear market signal. You can find Schannep's charts here:

The Dow Theory looks deceptively simple. However, its mastery takes time and dedicated effort. This is why you must take it seriously and study it passionately.


  1. hi there, curious you didnt mention william hamilton...dont you think he is underrated as a dow theorist????

  2. Hi Travis,

    something about Hamilton here:

    To be sincere, he is a great read but the one who really made the Dow Theory something actionable was Rhea. Of course, Rhea rested upon Hamilton's shoulders. So I am not dismissing him, and any Dow Theorist should read and digest his book (The Stock Market Barometer) and his WSJ editorials (which are compiled in Rhea's book).