ABSTRACT
The basics of the Dow Theory indicated a 1994–95 stock market gathering strength, although many moves were halting and uncertain. The averages discount everything that can be known about the economic condition of the country and, to a large degree, the world. This means the market is able to adjust to changes in economic conditions, which can have future impact on the earnings. Signs of inflation, possible recession, or a booming economy will all be swiftly adjusted into movements of the stock market. When a market shows a daily increase in volume, it gives a signal of building strength, frequently volume precedes price. A steady decline in volume is shows a weakening market, a market changing direction. In the past, many analysts regarded double tops and double bottoms as interesting phenomena, but with little forecasting value.
