When trading volume contracts during up waves and expands during down waves, it indicates an overbought market condition. Conversely, when volume contracts during declines and expands during up waves, it suggests an oversold market condition. Trading volume is typically relatively light during the initial stages of a bull market, while becoming highly active during its concluding phases.

The relationship between trading volume and price movement constitutes an exceptionally challenging research subject. Among all of Dow's theorems, his description of this relationship in the above theorem may be the least mature one.

Studying the changing relationship between trading volume and price movements can sometimes provide highly valuable insights into the underlying health of the market.

When processing volume data for informational purposes, the following two principles must be observed:

1. The importance of volume information always remains secondary to price information. Regardless of the research methodology employed, volume data constitutes derivative information and therefore does not possess primary importance.

2. Avoid excessive refinement in volume analysis. Since the 1970s, there has been a tendency toward increasingly refined analysis of volume data. As volume represents derivative information, overly refined volume analysis inevitably generates substantial informational noise, particularly following the extensive development of derivative financial instruments. An increasingly large portion of market volume no longer reflects strategic or operational intentions, but rather purely tactical moves—specifically, numerous position-adjustment trades. Consequently, the noise level in volume information has shown an upward trend. Under these circumstances, employing refined methods for volume analysis often yields more disadvantages than advantages.