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nism-series-xa-dow-theory-primary-uptrend-confirmation[ INVESTMENT ADVISER (LEVEL 1) ]

According to classic Dow Theory in technical analysis, what condition is required to confirm an ongoing 'Primary Uptrend' in the market?

[ A ]The price action forms successive Lower Highs and Lower Lows on declining volume.
[ B ]The central bank reduces the policy repo rate by exactly 50 basis points.
[ C ]Every stock in the index pays a dividend yield above 10%.
[ D ]The price action consistently forms a series of successive Higher Highs and Higher Lows, confirmed by volume and across major market averages.[ CORRECT ]
Takeaway

Dow Theory confirms a Primary Uptrend when price action forms a consistent series of successive Higher Highs and Higher Lows, with the trend corroborated by trading volume and across major market averages.

Derivation
Dow Theory's core premise is that markets move in identifiable, confirmable trends rather than randomly, and an uptrend is only validated when each successive rally exceeds the prior rally's peak (a Higher High) and each pullback holds above the prior pullback's low (a Higher Low) — a single higher high without a corresponding higher low, or vice versa, is insufficient confirmation. The theory further requires that volume expand on rallies and contract on pullbacks (confirming genuine buying conviction, not just drift), and that multiple major market averages move in tandem, since a trend confirmed in only one index while others diverge is considered suspect.
Why the others fail
A — The price action forms successive Lower Highs and Lower Lows on declining volume.
Successive Lower Highs and Lower Lows on declining volume describes the classic signature of a Primary Downtrend under Dow Theory, the opposite pattern from what confirms an uptrend.
B — The central bank reduces the policy repo rate by exactly 50 basis points.
A specific 50-basis-point repo rate cut is a monetary policy action, not a Dow Theory price-and-volume confirmation criterion for identifying a primary trend direction.
C — Every stock in the index pays a dividend yield above 10%.
Every index constituent paying a dividend yield above 10% is an unrealistic, unrelated income metric that plays no role in Dow Theory's price-and-volume-based trend confirmation framework.