A market trend is a distinguishable pattern or cycle established over a period of time.
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:
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
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.
A drop of between 10%-20% in a short period during an overall Bull market defines a correction.
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.
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.
Related Fool Articles
Recent Mentions on Fool.com
- Is Now the Right Time to Buy McDonald's Corporation Stock?
- Indigestion at Shake Shack, Fogo de Chao, and Noodles & Co.
- Better Buy: Starbucks Corporation or Dunkin? Brands Group Inc.?
- Better Dividend Stock: Intel Corporation or Qualcomm Inc.?
- 8 Charts to Celebrate the iPhone's 8th Birthday
- 3 Financial Stocks Hedge Funds Love