Market trends

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A market trend is a putative tendency of a financial market to move in a particular direction over time.[1] These trends are classified as secular for long time frames, primary for medium time frames, and secondary lasting short times.[2] Traders identify market trends using technical analysis, a framework which characterizes market trends as a predictable price response of the market at levels of price support and price resistance, varying over time.

The terms bull market and bear market describe upward and downward market trends, respectively, and can be used to describe either the market as a whole or specific sectors and securities.[3]

Contents

Secular market trends

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.

In a secular bull market the prevailing trend is "bullish" or upward moving. The United States stock market was described as being in a secular bull market from about 1983 to 2000 (or 2007), with brief upsets including the crash of 1987 and the dot-com bust of 2000–2002.

In a secular bear market, the prevailing trend is "bearish" or downward moving. An example of a secular bear market was seen in gold during the period between January 1980 to June 1999, culminating with the Brown Bottom. During this period the nominal gold price fell from a high of $850/oz ($30/g) to a low of $253/oz ($9/g),[4] and became part of the Great Commodities Depression.

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