Market trend (Technical Analysis):
A market trend is a perceived tendency of financial markets to move in a particular direction over time. These trends are classified as secular for long time frames, primary for medium time frames, and secondary for short time frames. Traders attempt to identify market trends using technical analysis, a framework which characterizes market trends as predictable price tendencies within the market when the price reaches support and resistance levels, varying over time.
Secular market trend
A secular market trend is a long-term trend that lasts 5 to 25 years and consists of a series of sequential primary
trends. A secular bear market consists of smaller bull markets and larger bear markets;
a secular bull market consists
of larger bull markets and smaller bear markets.
A primary trend has broad support throughout the entire market (most sectors) and lasts for a year or more.
A bull market is associated with increasing investor confidence and increased investing in anticipation of future
price increases (capital gains). A bullish trend in the stock market often begins before the general economy shows
clear signs of recovery. It is a win-win situation for investors.
India’s Bombay Stock Exchange Index, SENSEX, was in a bull market trend for about five years from April 2003 to
January 2008 as it increased from 2,900 points to 21,000 points.
A bear market is a general decline in the stock market over a period of time. It is a transition from high investor
optimism to widespread investor fear and pessimism. According to The Vanguard Group, “While there’s no
agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at
least a two-month period.” It is sometimes referred to as “The Heifer Market” due to the paradox with the above subject.
Secondary market trend
Secondary trends are short-term changes in price direction within a primary trend. The duration is a few weeks or a
One type of secondary market trend is called a market correction. A correction is a short-term price decline of 5% to
20% or so. A correction is a downward movement that is not large enough to be a bear market (ex-post).
Another type of secondary trend is called a bear market rally (or “sucker’s rally”) which consist of a market price
increase of 10% to 20%. A bear market rally is an upward movement that is not large enough to be a bull market (ex-post
). Bear market rallies occurred in the Dow Jones index after the 1929 stock market crash leading down to the
market bottom in 1932, and throughout the late 1960s and early 1970s. The Japanese Nikkei 225 has been typified
by a number of bear market rallies since the late 1980s while experiencing an overall long-term downward trend.
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