According to Dow Theory , any factors connected with supply and demand will be invitably reflected in the movement of an index. That information includes everthing, sometimes even such force masure as an earthquake, a disaster or any other occurance. Of course, such events can not be predicted , but the risks are priced in and if something happens, it is immediately reflected in the price movements.

Despite the fact that it is in excess of 100 years of age, the Dow Theory is as yet important in the current trading market. This is on the grounds that by understanding Dow Theory, traders can profit with spotting and taking advantage of patterns in the market.

Dow Theory is a popular analytical technique used in technical analysis to evaluate the direction of the market. Developed by Charles Dow and Edward Jones, Dow Theory was initially conceived as a method for determining the primary trend of stocks.