Introduction to Dow Theory
Figure 2.2 shows the gold market adjusting very rapidly to information about
the same event. The market is attempting to discount all information once the
information is made known to it.
In short, the market action is the sum of all participatory activity, based on
the aggregate of the participants’ beliefs, biases, personal predilections, as well as
future expectations. Price is the ultimate reflection and embodiment of everything
that is knowable. As such, the technical analysts need not concern themselves with
the causes or circumstances giving rise to various market action, but only with the
effects of the underlying causes.fIgure 2.1 Is the Market Discounting Unknown Information?
Courtesy of Stockcharts.comfIgure 2.2 Gold Adjusting Rapidly to New Information.
Courtesy of Stockcharts.com