CMA Final · Strategic Financial Management · Fundamental Analysis and Technical Analysis
In Dow Theory, which of the following is the correct description of the 'primary trend'?
In Dow Theory the primary trend is the major market movement lasting from one year to several years. Secondary trends are intermediate corrections lasting weeks to months, and minor trends are short fluctuations of under three weeks.
- AA major trend lasting from one year to several yearsCorrect
- BA short fluctuation lasting less than three weeks
- CA correction lasting three weeks to three months
- DAn intraday movement caused by news
Explanation
Dow Theory classifies trends as primary (major, lasting a year or more), secondary (intermediate corrections of three weeks to months) and minor (less than three weeks). Only the first option describes the primary trend.
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