CS Executive · Corporate Accounting and Financial Management · Security Analysis
According to Dow Theory, the primary trend of the market is best described as:
Under Dow Theory the primary trend is the long-term movement, typically lasting one year to several years, forming a bull or bear market. Secondary trends are corrections within it and minor trends are short-lived daily fluctuations, so only the long-duration option describes the primary trend.
- AA long-term movement lasting from about one year to several years, such as a bull or bear phaseCorrect
- BA short-term fluctuation lasting a few days to three weeks
- CA correction that retraces one-third to two-thirds of the earlier move
- DA daily random movement caused by news events
Explanation
Dow Theory recognises three movements. The primary trend is the major long-term bull or bear phase lasting a year or more. The short-term fluctuation option describes minor movements, and the retracement option describes the secondary reaction.
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