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    characterized by phases identified as prosperity, recession, depression, and recovery.

    By noting the relative pri

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    Dow Theory's author, Charles Dow, theorized a relationship existed between the Dow-Jones Industrial and Transportation Averages that could be used to forecast business cycles.

    In the early 20th century, the Dow Jones Industrials consisted primarily of thirty blue chip manufacturing companies called "smoke stacks". The twenty Transportations consisted primarily of railroads. The "rails" delivered raw materials to the "smoke stacks".

    The business cycle was characterized by phases identified as prosperity, recession, depression, and recovery.

    By noting the relative pric

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    Averages that could be used to forecast business cycles.

    In the early 20th century, the Dow Jones Industrials consisted primarily of thirty blue chip manufacturing companies called "smoke stacks". The twenty Transportations consisted primarily of railroads. The "rails" delivered raw materials to the "smoke stacks".

    The business cycle was characterized by phases identified as prosperity, recession, depression, and recovery.

    By noting the relative pri

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    sisted primarily of thirty blue chip manufacturing companies called "smoke stacks". The twenty Transportations consisted primarily of railroads. The "rails" delivered raw materials to the "smoke stacks".

    The business cycle was characterized by phases identified as prosperity, recession, depression, and recovery.

    By noting the relative pri

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    sted primarily of railroads. The "rails" delivered raw materials to the "smoke stacks".

    The business cycle was characterized by phases identified as prosperity, recession, depression, and recovery.

    By noting the relative pri

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    characterized by phases identified as prosperity, recession, depression, and recovery.

    By noting the relative price action between the industrials and the transportations, it was believed that an astute investor could determine when the economy was shifting from one phase to another and act accordingly.

    Regardless of how useful Dow Theory may have been then, can the same be said now, given all the component changes that have taken place within those averages? I think not.

    Today the "smoke stacks" have been replaced by the "service" economy. Instead of steels, chemica

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