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A market trend is a perceived tendency of the financial markets to move in a particular direction over time. Analysts classify these trends 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 price reaches support and resistance levels, varying over time. A future market trend can only be determined in hindsight, since at any time prices in the future are not known. Past trends are identified by drawing lines, known as trendlines, that connect price action making higher highs and higher lows for an uptrend, or lower lows and lower highs for a downtrend. Market terminology 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. The terms come from London's Exchange Alley in the early 18th century, where traders who engaged in naked short selling were called "bear-skin jobbers" because they sold a bear's skin (the shares) before catching the bear. This was simplified to "bears," while traders who bought shares on credit were called "bulls." The latter term might have originated by analogy to bear-baiting and bull-baiting, two animal fighting sports of the time. Thomas Mortimer recorded both terms in his 1761 book Every Man His Own Broker. He remarked that bulls who bought in excess of present demand might be seen wandering among brokers' offices moaning for a buyer, while bears rushed about devouring any shares they could find to close their short positions. An unrelated folk etymology supposes that the terms refer to a bear clawing downward to attack and a bull bucking upward with its horns. Secular trends A secular market trend is a lasting long-term trend that lasts 5 to 25 years and consists of a series of 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 Black Monday and the Stock market downturn of 2002, triggered by the crash of the dot-com bubble. Another example is the 2000s commodities boom. In a secular bear market, the prevailing trend is "bearish" or downward-moving. An example of a secular bear market occurred in gold from January 1980 to June 1999, culminating with the Brown Bottom. During this period, the market price of gold fell from a high of $850/oz ($30/g) to a low of $253/oz ($9/g). The stock market was also described as being in a secular bear market from 1929 to 1949. Primary trends A primary trend has broad support throughout the entire market, across most sectors, and lasts for a year or more. Bull market A bull market is a period of generally rising prices. The start of a bull market is marked by widespread pessimism. This point is when the "crowd" is the most "bearish". The feeling of despondency changes to hope, "optimism", and eventually euphoria as the bull runs its course. This often leads the economic cycle, for example, in a full recession, or earlier. Generally, bull markets begin when stocks rise 20% from their low and end when stocks experience a 20% drawdown. However, some analysts suggest a bull market cannot happen within a bear market. An analysis of Morningstar, Inc. stock market data from 1926 to 2014 revealed that, on average, a typical bull market lasted 8.5 years with a cumulative total return averaging 458%. Additionally, annualized gains for bull markets ranged from 14.9% to 34.1%. Examples India's Bombay Stock Exchange Index, BSE SENSEX, experienced a major bull market trend from April 2003 to January 2008. It increased from 2,900 points to 21,000 points, representing a more than 600% return in 5 years. Notable bull markets characterized the 1925–1929, 1953–1957, and 1993–1997 periods when the U.S. and many other stock markets experienced significant growth. While the first period ended abruptly with the start of the Great Depression, the end of the later time periods were mostly periods of soft landing, which became large bear markets. (see: Recession of 1960–61 and the dot-com bubble in 2000–2001) Bear market A bear market is a general decline in the stock market over a period of time. It involves a transition from high investor optimism to widespread investor fear and pessimism. One generally accepted measure of a bear market is a price decline of 20% or more over at least a two-month period. A decline of 10% to 20% is classified as a correction. Bear markets conclude when stocks recover, reaching new highs. The bear market is then assessed retrospectively from the recent highs to the lowest closing price, and its recovery period spans from the lowest closing price to the attainment of new highs. Another commonly accepted indicator of the end of a bear market is indices gaining 20% or more from their low. From 1926 to 2014, the average duration of a bear market was 13 months, accompanied by an average cumulative loss of 30%. Annualized declines for bear markets ranged from −19.7% to −47%. Examples Some examples of a bear market include: The Wall Street Crash of 1929, which erased 89% (from 386 to 40) of the Dow Jones Industrial Average's market capitalization by July 1932, marking the start of the Great Depression. After regaining nearly 50% of its losses, a longer bear market from 1937 to 1942 occurred in which the market was again cut in half. A long-term bear market occurred from about 1973 to 1982, encompassing the 1970s energy crisis and the high unemployment of the early 1980s. A bear market occurred in India following the 1992 Indian stock market scam committed by Harshad Mehta. The Stock market downturn of 2002. As a result of the financial crisis of 2007–2008, a bear market occurred between October 2007 and March 2009. The 2015 Chinese stock market crash. In early 2020, as a result of the COVID-19 pandemic, multiple stock market crashes have led to bear markets across the world. In 2022, concerns over an inflation surge and potential rises of the federal funds rate caused a bear market. Market top A market top (or market high) is usually not a dramatic event. The market has simply reached the highest point that it will, for some time. This identification is retrospective, as market participants are generally unaware of it when it occurs. Thus prices subsequently fall, either slowly or more rapidly. According to William O'Neil, since the 1950s, a market top is characterized by three to five distribution days in a major stock market index occurring within a relatively short period of time. Distribution is.... Discover the David Trend popular books. Find the top 100 most popular David Trend books.