Market trends
In the investment, financial markets are believed to have perfect market trends which are also classified as primary trends, secondary trends, and secular trends. This is a belief or a trend which is permanent with the practice of the technical analysis and broadly inconsistent with the standard academic view of financial markets, the efficient market hypothesis. Market trends can also be defined as when the buyers outnumber the bears or just the reverse. A bull market is described as the trend or the sentiment that drives it. Sometimes it can also refer to specific securities and sectors
Market trends are associated with increasing investor confidence that motivates the investors for buying in anticipation of some capital gains. In the year 1990s the longest and the most famous bull market was established. The financial market behavior is also described as metaphorically, as a herd. This idea is relevant to the participants in the bull market as the bulls are the herding animals. Sometimes the bull market is also described as Bull Run. The market trends characters are also described by the Dow Theory. The United States is described as being in a long-term bull market since about 1983, with brief upsets including the Panic of 1987 and the NASDAQ Crash in 2000. Another concept of the market trend is described as bear market which is being accompanied by widespread despair.
The secondary market trends are a temporary change in the price with a primary trend. All these things usually last for a few weeks. If there is a temporary decrease in the bull market it is called as a correction. A temporary increase in the bear market of the primary market trends is called as a bear market rally. The term correction in the bear market is also defined as a drop of 10% to 20% for a shorter span. The market trends differ from the bear market because it holds a smaller magnitude and duration. Because of the depressed prices and the valuation the market corrections are good opportunity for the value strategy investors. If a person buys at the point of time when others are selling the prices start falling making the ratio going down. A person is also able to purchase underrated stocks with a highly possible upside potential. Market trends comprising both secondary and primary market trends are fueled by sound economic considerations which also include investors' cognitive biases and emotional biases.
There are certain historic examples in the market trends which include the following:
The stock market downturn of 2002.
The Crash of 1929 proved an end to the bull market that existed throughout the 1920's.
The Black Monday crash of 1987 was a sharp, dramatic correction within an increasing trend and did not push the markets into a bear market.
The October 27, 1997 mini-crash is considered a fairly negligible stock market correction In May 2006, the rising markets include the India witnessed a correction in the market trends.