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Market trend

A market trend is a distinguishable pattern or cycle established over a period of time.

Contents

Expanded Definition

Trends

Over time, markets establish certain patterns or trends such as bear markets or bull markets. The overall trend of the market is upward if viewed over a long period of time, however, there are smaller up and down cycles or trends established within the overall upward trend of the market.

Within the markets, analysts recognize 3 basic trends:

Primary

A primary trend is the overall direction of the market during a defined time period; either Bull or Bear. Bull being an upward trend, and a Bear being a downward trend. For example, the mid-to-late 1990s was considered a Bull market, whereas the period from 1929 to 1944 which defined the Great Depression, was a Bear market

Secondary

A secondary trend is a reversal of the primary trend within a short period of time. For example, if during an overall Bull market, there is a sudden drop in the market, the secondary trend is bearish in nature.

Corrections

A drop of between 10%-20% in a short period during an overall Bull market defines a correction.

Rallies

An increase of between 10%-20% in a short period during an overall Bear market defines a rally. Often this is referred to a Bear market rally.

Secular

A secular trend is a primary trend which persists for an extended period of time. The Great Depression began in 1929 with a sudden correction, which led to a Bear market, which in turn, lasted for 15 years. This 15 year period is considered a secular bear market.

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