Tag Archives: stages of stock life cycle

DOW Theory versus London AIM Stocks

See larger image

Additional Images:

The Dow Theory – A Must Read For All Investors

Published by Barron’s, this is an explanation of Dow Theory development and an attempt to define its usefulness as an aid to speculation. Rhea carefully studied 252 editorials of Charles H. Dow and William Peter Hamilton in order to present Dow Theory in terms that would be useful for the individual investor.
New From: £11.69 GBP In Stock

Disclaimer: This post is just for information and educational purposes. Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.


The Dow theory has been around for almost 100 years. It was authored by Charles H. Dow from 1900 until the time of his death in 1902. It is a strong proof of human emotions and manipulations in a stock’s life cycle. Nearly all markets and all sectors show this behaviour because they are all driven by human emotions. During my trading in London AIM stock market I have seen it working more times than usual. It is probably because the AIM market is not very liquid and emotions run high on bulletin boards and hot tip providers. Institutions and bigger players are aware of this and they manipulate long term investors. Manipulation is a big element explained in DOW theory.

Dow theory can be essentially broken into few stages which are shown below.


Now look at these charts of 15 well known and well traded stocks to compare them against diagram above. Few of these have already completed all stages while others are still in the process. Other thing to note is that the amount of time taken to complete these stages can not be determined with accuracy however, stages can be determined so if you are planning to take positions in the market you may have to keep them open for a long time. Else you can open and close positions on the way while keeping the bigger picture in mind.

QPP (Coming out of Despair phase)

qpp dow

QFI (Quadrise Fuels, going into Despair phase)


Coms (In Despair stage)


Fusionex (Came out of despair phase finally)


SEE (Seeing Machines, going towards despair phase)


FLOW (Is in Despair phase)


AVO (Going towards despair phase)


IGR (It is in Return To Normal stage)

igr dow

LBB (Is in Despair stage)


APC (Is close to Despair stage)


VLS (Is in Despair Stage)


NPT (NetPlay is coming out of Despair stage)


ODX (Going towards despair stage)


CBUY (Is coming out of despair stage)


EPO (Return to Normal stage)


AFC (Return to Normal Stage)





Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.